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HomeMy WebLinkAboutCC AG PKT 2002-09-23 #Y b 0 D AGENDA REPORT g ® G DATE: September 23, 2002 E ' • , TO: Honorable Mayor and City Council THRU: John B. Bahorski, City Manager FROM: Mac Cummins, Associate Planner /Special Projects Manager SUBJECT: Establishment of Community Facilities Districts No. 2002 -01 (Heron Pointe) i ' SUMMARY OF REQUEST: That City Council: 1. Conduct a public hearing regarding the establishment of Community Facilities District No. 2002 -01 (Heron Pointe) (the "District") and related matters. 2, Adopt a resolution establishing the District, authorizing the levy of a special tax, and approving certain related matters. 3. Adopt a resolution determining the necessity to incur bonded indebtedness in an amount not to exceed $5,000,000 for the District, calling an election, and approving certain related matters. 4. Adopt a resolution declaring the result of the special bond and special tax election in the District and approving certain related matters. 5. Approve the first reading by title only and subsequent adoption of an ordinance authorizing the levy of a special tax within the District. BACKGROUND: When the Hellman Ranch development agreement was signed, it was contemplated that a Community Facilities District would be created to help finance some of the public improvements necessary for the effective development of the Hellman Rarich. The District will include all parcels located in the Hellman Ranch (now known as Heron Pointe) development, and will issue bonds to finance certain public improvements (including certain public improvements normally financed through development fees). This tax will be paid along with property taxes by the homeowners who purchase parcels Agenda Item / in the Hellman Ranch, and the proceeds of the tax will be used to make debt service payments on the bonds issued by the District and pay incidental expenses. Major Steps in a Community Facilities District Financing: 1. City authorizes contracts with financing consultants and enters into service contracts with consultants. 2. Consultants, in conjunction with City Staff and Developer, prepare rate and method of apportionment for special tax, develop program of improvements, and establish community facilities district goals and guidelines for City. 3. City Council Approves Resolutions of Intention to form CFD and to authorize the incurrence of bonded indebtedness. 4. After giving proper notice by mail and by publication, City Council holds public hearing and adopts resolutions forming district, authorizing issuance of debt, and calling election. With landowner consent, election is held at same City Council meeting in a landowner election. City Council then certifies results of election and passes first reading of ordinance levying the special tax. This meeting takes place approximately one months following the adoption of the Resolutions of Intention. 5. City Council adopts Ordinance Levying Special Tax 6. Bond Underwriter, in conjunction with City Staff and Consultants, designs bond solution to meet goals of City, and enters into purchase agreement to purchase bonds from the City. 7. Bonds close and funds become available for acquisition or construction of improvements. The hearings this evening are steps Nos. 4 & 5 in the process. The resolutions to be adopted tonight also approve an acquisition and funding agreement with the John Laing Homes, the developer of the property, pursuant to which the City agrees to acquire the improvements if bonds are issued and certain other conditions are met. Tonight's resolutions approve the rate and method of the special tax as it was proposed by previous resolution of the Council, but modify that rate and method to ensure that the maximum special tax does not increase beyond Fiscal Year 2012 -13. Key Personnel in formation of Hellman Ranch CFD: City Of Seal Beach: Lead City Liason/project manager: Mac Cummins City Manager: John Bahorski • 707111 -2 Director of Development Services: Lee Whittenberg Director of Public Works /City Engineer: Doug Dancs _ City Attorney: Quinn Barrow Bond Counsel: Robin Harris /Mark Mandell (Richards, Watson & Gershon) City Consultant Team Financial Consultant: Larry Rollapp (Fieldman, Rollapp, & Associates) Special Tax Consultant: David Taussig (David Taussig & Associates) - Appraiser: Steve White Underwriter: Dawn Vincient (Stone & Youngberg) Hellman Ranch CFD Team: Hellman Ranch Point of Contact: Dave Bartlett Hellman Ranch Development Company Contact: Jerry Tone John Laing Homes Contact: Joanie Madrid & David Dirienzo Improvements to be completed through CFD: A. Sanitary Sewer Facilities B. Water Facilities C. Roadway Facilities D. Park, Access, Landscape & Wall Facilities E. Dry Utilities and Joint Trench F. Grading G. Improvements Funded With Sewer, Water, Storm Drain, And Transportation Fees Tonight's Actions 1. If majority protests are not received prior to the conclusion of the public hearing, the public hearing will be closed and the City Council may adopt the following resolutions: • Adopt a resolution establishing the District, authorizing the levy of a special tax, and approving certain related matters. • Resolution determining the necessity to incur bonded indebtedness for the District, calling an election, and approving certain related matters.. 2. The City Clerk will have received from John Laing Homes a petition waiving the timelines under the election code and permitting a special election to be held at the 707111 -2 conclusion of the public hearings. The City Clerk will therefore conduct an election in connection with the District and receive a voted ballot from John Laing Homes, - which as sole landowner in the District, is the only election of the District. 3. If a 2/3 vote in favor of the District is received, the City Council may adopt the following resolutions and adopt the following resolution: • .Resolution declaring the result of the special bond and special tax election in the District and approving certain related matters The City Council may also introduce the following ordinance: Ordinance authorizing the levy of a special tax within the District. • Future Actions The Council will be asked at a later date to adopt the ordinance providing for the levying of the special tax and approve resolutions to issue bonds. FISCAL IMPACT: None. All staff time and incidental costs associated with to project will be billed to the developer, and the costs of the public facilities and consultants will be paid for with bond proceeds. The costs of the public improvements will be paid by the special tax levied against the owners of property at Heron Pointe. RECOMMENDATION: That the City Council: 1. Conduct a public hearing regarding the establishment of Community Facilities District No. 2002 -01 (Heron Pointe) and related matters. 2. Adopt a resolution establishing the District, authorizing the levy of a special tax, and approving certain related matters. 3. Adopt a resolution determining the necessity to incur bonded indebtedness in an amount not to exceed $5,000,000 for the District, calling an election, and approving certain related matters. 4. Adopt a resolution declaring the result of the special bond and special tax election in the District and approving certain related matters. 5. Approve the first reading by title only and subsequent adoption of an ordinance authorizing the levy of a special tax within the District. 707111 -2 NOTED AND APPRO D: Mac Cummins John B. . 7 • rski Associate Planner City .1 ager Attachments: (6) 1. Community Facilities District Report - Community Facilities District No. 2002 -01 (Heron Pointe) 2. District Maps 3. Resolution Of The City Council Of The City Of Seal Beach To Establish City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe), To Establish An Appropriations Limit For The District, To Authorize, With Modifications, The Levy Of A Special Tax Within The District, To Call A Special Election Within The District And To Take Certain Other Actions 4. Resolution Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe), To Declare The Necessity To Incur A Bonded Indebtedness Within That District And To Order Submitted To The Qualified Electors Of The District Propositions Relating To The District 5. A Resolution Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) To Certify The Results Of The September 23, 2002 Special Tax And Bond Election 6. An Ordinance Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) Authorizing The Levy Of A Special Tax Within That District 707111 -2 COMMUNITY FACILITIES DISTRICT REPORT MELLO -ROOS COMMUNITY FACILITIES ACT OF 1982 CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE) Prepared for Prepared by CITY OF SEAL BEACH DAVID TAUSSIG & ASSOCIATES, INC. 211 Eighth Street 1301 Dove Street, Suite 600 Seal Beach, CA 90740 Newport Beach, CA 92660 (949) 955 -1500 TABLE OF CONTENTS Section Pale I. INTRODUCTION 1 II. DISTRICT DESCRIPTION 2 III. DESCRIPTION AND ESTIMATED COST OF PROPOSED FACILITIES 3 A. Description Of Proposed Public Improvements 3 B. Estimated Cost Of Proposed Public Improvements 3 IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES 5 A. Projected Bond Sales 5 B. Incidental Bond Issuance Expenses To Be Included In The Proposed Bonded Indebtedness 5 C. Incidental Expenses To Be Included In The Annual Levy Of Special Taxes 5 V. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX 6 A. Explanation For Special Tax Apportionment 6 B. Maximum Special Tax Rates 7 C. Backup Special Tax 7 D. Accuracy Of Information 8 VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT 9 VII. GENERAL TERMS AND CONDITIONS 10 A. Substitution Facilities 10 B. Appeals 10 C. Prepayment 10 EXHIBITS Exhibit A Rate and Method of Apportionment Exhibit B Assigned Special Tax Rates for Developed Property Exhibit C Maximum Special Tax for Undeveloped Property, Taxable Public Property and Taxable Property Ovvner Association Property Exhibit D Boundary Map I. INTRODUCTION WHEREAS, the City Council of the City of Seal Beach (hereinafter referred to as the "Council ") did, pursuant to the provision of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (hereinafter referred to as the "Act "), and specifically Section 53321.5 thereof, expressly order the filing of a written "Report" with the legislative body of the proposed community facilities district. This community facilities district being Community Facilities District No. 2002 -01 (Heron Pointe) shall hereinafter be referred to as: "CFD No. 2002-01"; and, WHEREAS, A Resolution of the City Council of the City of Seal Beach to Establish City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) and to Authorize the Levy of a Special Tax Within City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (hereinafter refer ed to the "Resolution of Intention ") did direct that said Report generally contain the following: 1. A brief description of the facilities by type which will be required to adequately meet the needs of CFD No. 2002 -01; and 2. An estimate of the fair and reasonable cost of financing the Facilities, including incidental expenses and including the costs of the proposed bond financing and all other related costs as provided for in Section 53345.3 of the Act. NOW, THEREFORE, the authorized representative of the City of Seal Beach and the appointed responsible officer has caused the Report to be prepared by David Taussig & Associates, Inc. and does hereby submit the Report. • City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 1 II. DISTRICT DESCRIPTION CFD No. 2002 -01 encompasses approximately 18.4 gross acres of land in the City of Seal Beach known as Heron Pointe. Of this acreage, approximately 12.2 acres are expected to be developed into uses subject to a Mello -Roos special tax levy. At buildout, the property within CFD No. 2002 -01 will be developed with approximately 70 single- family residential units. • City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 2 III. DESCRIPTION AND ESTIMATED COST OF PROPOSED FACILITIES A. Description of Proposed Public Improvements A community facilities district may provide for the purchase, construction, expansion or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements, with an estimated useful life of five (5) years or longer, which is necessary to meet increased demands placed upon local agencies as a result of development or rehabilitation occurring within the community facilities district. In addition, a community facilities district may pay in full all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay for any indebtedness secured by any tax, fee, charge, or assessment levied within the area of the community facilities district. The facilities described in this Report are all facilities which the legislative body creating CFD No. 2002 -01 is authorized, pursuant to an agreement meeting the requirements of Section 53316.2 of the Act or otherwise to own, construct, or finance, and which are required to adequately meet the needs of CFD No. 2002 -01. The actual facilities described herein are those currently expected to be required to adequately meet, in part, the needs of CFD No. 2002 -01. Because the actual needs of CFD No. 2002 -01 arising as development progresses therein may differ from those currently anticipated, CFD No. 2002 -01 reserves the right to modify the actual facilities proposed herein to the extent CFD No. 2002 -01 deems necessary, in its sole discretion to meet those needs. The Special Taxes' required to pay for the construction or financing of said facilities will be apportioned as described in the Rate and Method of Apportionment of the Special Tax for CFD No. 2002 -01. B. Estimated Cost of Proposed Public Improvements The facilities and the estimated costs are subject to review /confirmation. The costs listed in Table 1 below are estimates only, based upon current construction estimates and actual costs may differ from those estimates herein. The improvements and facilities consist primarily of public improvements with a useful life of not less than five years including (i) street, sidewalk, street light, traffic signal, drainage, signage median and appurtenant improvements to Seal Beach Boulevard, Aldolpho Lopez Drive, and Heron Pointe, including, but not limited to, relocation of existing overhead utilities lines and construction of joint trench in furtherance of public safety, (ii) water and sanitary improvements serving real property within CFD No. 2002 -01, including, but not limited to, a sewer lift station, (iii) dry utility improvements and burd vaults serving CFD No. 2002 -01, (iv) improvements to Gum Grove Park, including, but not limited to, landscaping and access improvements, (v) landscape improvements along Seal Beach Boulevard, (vi) sewer, water, park, storm drain, and transportation improvements to be funded through development fees charged by the City of Seal Beach in connection with the development of real property within CFD No. 2002 -01. The estimated costs of the facilities are shown in Table 1 below. 'All capitalized terms used herein, unless otherwise indicated, shall have the meanings defined in the Rate and Method of Apportionment. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 3 TABLE 1 Facilities Improvements Estimated Cost Sanitary Sewer Facilities $641,233 Water Facilities $200,383 Roadway Facilities $483,264 Park, Access, Landscape, and Wall Facilities $349,000 Dry Utilities and Joint Trench $120,735 Grading $15,257 Engineering Plan Preparation $44,300 Facilities Subtotal $1,854,171 Contingency (for Facilities) $185,417 Project Management $185,417 Project Inspection $185,417 Development Fees $570,596 Contingency (for Development Fees) $34,236 Total Estimated Facilities Costs (Excluding Incidental Expenses) $3,015,254 City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 4 IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES A. Projected Bond Sales The maximum authorized bonded indebtedness for CFD No. 2002 -01 is $5,000,000. It is anticipated that CFD No. 2002 -01 will sell one bond issue with a term of 30 years in the fall of 2002. B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness Pursuant to Section 53345.3 of the Act, bonded indebtedness may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the proposed debt is to be incurred, including, but not limited to, the costs of legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on any bonds of the district due and payable prior to the expiration of one year from the date of completion of the facilities, not to exceed two years; election costs; and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. For the bonds proposed to be issued by CFD No. 2002 -01, the reserve fund is estimated at approximately 8.46 percent of the principal amount of the bonds, and capitalized interest is estimated at approximately 10.07 percent of the principal amount of the bonds. Incidental bond issuance expenses of 8.46 percent are estimated for the bonds. C. Incidental Expenses to be Included in the Annual Levy of Special Taxes Pursuant to Section 53340 of the Act, the proceeds of any special tax may only be used to pay, in whole or part, the cost of providing public facilities, services and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the cost of planning and designing public facilities to be financed, including the cost of environmental evaluations of those facilities; the costs associated with the creation of the district, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of the district; any other expenses incidental to the construction, completion, and inspection of the authorized work; and the retirement of existing bonded indebtedness. While the actual cost of administering CFD No. 2002 -01 may vary, it is anticipated that the amount of special taxes which can be collected will be sufficient to fund at least $40,000 in annual administrative expenses, escalating at two percent per year through fiscal year 2012 -13. • • City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 5 V. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX All of the property located within CFD No. 2002 -01, unless exempted by law or by the Rate and Method of Apportionment, shall be taxed for the purpose of providing necessary facilities to serve CFD No. 2002 -01. Pursuant to Section 53325.3 of the Act, the tax imposed "is a Special Tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property." The Special Tax "may be based on benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel or other reasonable basis as determined by the legislative body," although the Special Tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. As shown in Exhibit A, the adopted Rate and Method of Apportionment provides information sufficient to allow each property owner within CFD No. 2002 -01 to estimate the maximum annual Special Tax he or she will be required to pay. Sections A and B, below, provide additional information on the Rate and Method of Apportionment of the Special Tax for CFD No. 2002 -01. A. Explanation for Special Tax Apportionment When a community facilities district is formed, a Special Tax may be levied on each parcel of taxable property within the CFD to pay for the construction, acquisition and rehabilitation of public facilities, to pay for authorized services or to repay bonded indebtedness or other related expenses incurred by CFD No. 2002 -01. This Special Tax must be apportioned in a reasonable manner; however, the tax may not be apportioned on an ad valorem basis. When more than one type of land use is present within a community facilities district, several criteria may be considered when apportioning the Special Tax. Generally, criteria based on building square footage, acreage, and land use are selected, and categories based on such criteria are established to differentiate between parcels of property. These categories are a direct result of the projected product mix, and are reflective of the proposed land use types within that community facilities district. Specific Special Tax levels are assigned to each land use class, with all parcels within a land use class assigned the same Special Tax rate. The Act does not require that Special Taxes be apportioned to individual parcels based on benefit received. However, in order to insure fairness and equity, benefit principles have been incorporated in establishing the Special Tax rates for CFD No. 2002 -01. The major assumption inherent in the Special Tax rates set forth in the Rate and Method of Apportionment is that the level of benefit received from the proposed public improvements is a function of building square footage. This assumption is borne out through an examination of . commonly accepted statistical measures for public facility usage. For example, in measuring average weekday vehicle trip -ends, the Institute of Transportation Engineer's Trip Generation manual identifies land use as the primary determinant of trip -end magnitude. Larger buildings typically generate a greater number of trip -ends than do smaller buildings, and therefore, will tend to receive more benefit from road improvements. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 6 In addition, larger buildings typically generate a greater number of "Person Hours," or the number of hours per week that residents associated with a specific type of land use could potentially use park facilities. Another example is sewer treatment costs, which are based on plant capacity to treat biochemical oxygen demand (BOD), suspended solids (SS), and the flow rate. Other variables for water and sewer requirements include storage and fire flow requirements, as well as the number of bathrooms and fixture units, which tends to vary with the size of the lot and the size of the building. Five Land Use Classes have been established for CFD No. 2002 -01. Residential Property will be assigned to Land Use Classes 1 through 4 based on the size of the home. Non - Residential Property will be assigned to Land Use Class 5 and the Special Tax will be determined based on the acreage of the Assessor's Parcel. In addition, in order to insure fairness, the Special Tax rates are uniformly applied to all Developed Property within CFD No. 2002 -01. Based on the types of public facilities that are proposed for CFD No. 2002 -01 and the factors described above, the Special Taxes assigned to Developed Properties are generally proportionate to the relative benefits received by them, and, accordingly, the Special Taxes in CFD No. 2002 -01 can be considered fair and reasonable. B. Maximum Special Tax Rates Exhibit B lists the Assigned Special Tax that may be levied against Developed Property within CFD No. 2002 -01. Exhibit C lists the Maximum Special Tax that may be levied against Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property within CFD No. 2002 -01. The Special Taxes on Developed Property cannot exceed the rates shown in Exhibit B, except when the Backup Special Tax is used as discussed in Section C below. On each July 1, commencing July 1, 2003 and through and including July 1, 2012, the Assigned Special Tax for Developed Property and the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property will increase at a rate of two percent of the amount in effect for the previous fiscal year. The Assigned Special Tax and Maximum Special Tax will not increase subsequent to July 1, 2012. Each year the Special Tax shall be levied subject to the methodology and Maximum Special Taxes set forth in the Rate and Method of Apportionment, in an amount sufficient to meet the Special Tax Requirement. C. Backup Special Tax Pursuant to the Rate and Method of Apportionment, the Maximum Special Tax for Developed Property is the greater of (i) the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. The Fiscal Year 2002 -2003 Backup Special Tax is equal to $41,977 per acre. The Backup Special Tax will increase at a rate of two percent per year commencing July 1, 2003 and through and including July 1, 2012. There will be no increase in the Backup Special Tax subsequent to July 1, 2012. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) - Page 7 Under certain circumstances, the Special Tax for some parcels classified as Developed Property will be increased above the Assigned Special Tax shown in Exhibit B until the Special Tax Requirement is met. However, under no circumstances will the Special Tax on an Assessor's Parcel of Developed Property be increased above the greater of the Backup Special Tax or the applicable Assigned Special Tax. D. Accuracy of Information In order to establish the Maximum Special Tax rates for Developed Property as set forth in the Rate and Method of Apportionment for CFD No. 2002 -01, David Taussig and Associates, Inc. has relied on information including, but not limited to, acreage, absorption, and land -use types, which were provided to David Taussig and Associates, Inc., by others. David Taussig and Associates, Inc. has not independently verified such data and disclaims responsibility for the impact of inaccurate data provided by others, if any, on the Rate and Method of Apportionment for CFD No. 2002 -01, including the inability to meet the financial obligations of CFD No. 2002 -01. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 8 • VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT The boundaries of CFD No. 2002 -01 include all land on which the Special Taxes may be levied. A map showing the boundaries of CFD No. 2002 -01 is provided as Exhibit D. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 9 VII. GENERAL TERMS AND CONDITIONS A. Substitution Facilities The description of the public facilities, as set forth herein, are general in their nature. The fmal nature and location of improvements and facilities will be determined upon the preparation of final plans and specifications. The final plans may show substitutes, in lieu or modifications to the proposed work in order to accomplish the work of improvement, and any such substitution shall not be a change or modification in the proceedings as long as the facilities provide a service and are of a type substantially similar to that as set forth in this Report. B. Appeals Any taxpayer may file a written appeal of the Special Tax on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant's property and/or provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City clerk, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator's determination. C. Prepayment The Special Tax applicable to an Assessor's Parcel in CFD No. 2002 -01 may be prepaid according to the prepayment provisions in the Rate and Method of Apportionment. K:\Chents2 \Seal Beach\ mello \cfd2002- 1\docs \CFD RPT5.doc • City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 10 EXHIBIT A CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) RATE AND METHOD OF APPORTIONMENT RATE AND METHOD OF APPORTIONMENT FOR CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in the City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) ( "CFD No. 2002-01") and collected each Fiscal Year commencing in Fiscal Year 2002 -03, in an amount determined by the City Council of the City of Seal Beach, through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 2002 -01, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2002 -01: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with City, CFD No. 2002 -01 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2002 -01 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2002 -01 for any other administrative purposes of CFD No. 2002 -01, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's parcel number. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 1 "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C below. "Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by the City on behalf of CFD No. 2002 -01 under the Act. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 2002 -01" means the City of Seal Beach Community Facilities District No. 2002- 01 (Heron Pointe). "City" means the City of Seal Beach. "Council" means the City Council of the City. "County" means the County of Orange. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction was issued after January 1, 2001 and prior to January 1 of the prior Fiscal Year. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Class" means any of the classes listed in Table 1 below. "Maximum Special Tax" means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non- Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for a non - residential use. "Outstanding Bonds" means all Bonds which are deemed to be outstanding under the Indenture. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 2 "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property. For Taxable Public Property and Taxable Property Owner Association Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Taxable Public Property or Taxable Property Owner Association Property, as applicable. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2002 -01 that was owned by a property owner association, including any master or sub - association, as of January 1 of the prior Fiscal Year. "Public Property" means, for each Fiscal Year, any property within CFD No. 2002 -01 that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, the State, the County, the City or any other public agency as of June 30 of the prior Fiscal Year; provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. To ensure that property is classified as Public Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later than June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2002 -01 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of CFD No. 2002 -01 facilities eligible under the Act; (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 3 • "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2002 -01 which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2002 -01 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX 1. Developed Property a. Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Fiscal Year 2002 -03 Assigned Special Tax for each Land Use Class is shown below in Table 1. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 4 TABLE 1 Fiscal Year 2002 -03 Assigned Special Taxes for Developed Property in Community Facilities District No. 2002 -01 (Heron Pointe) • I;and,Use „ Descnptiori "w� Residential Floor Area ° Assigne Sp ec ial Tax Classy � nti 1 Residential Property >_ 4,000 s.f. $5,350 per unit 2 Residential Property 3,750 — 3,999 s.f. $5,078 per unit 3 Residential Property 3, 500 — 3,749 s.f. $4,900 per unit 4 Residential Property < 3,500 s.f. $4,570 per unit 5 Non - Residential Property NA $41,977 per Acre c. Backup Special Tax The Fiscal Year 2002 -03 Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $41,977 per Acre. d. Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Assigned Tax or Backup Special Tax subsequent to July 1, 2012. 2. Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property a. Maximum Special Tax • The Fiscal Year 2002 -03 Maximum Special Tax for Undeveloped Property, - Taxable Public Property, and Taxable Property Owner Association Property shall be $47,043 per Acre. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 5 b. Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property subsequent to July 1, 2012. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002 -03 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equal the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at up to the Maximum Special Tax for Taxable Property Owner Association Property; and Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property at up to the Maximum Special Tax for Taxable Public Property. • Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the CFD. City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 6 i E. EXEMPTIONS No Special Tax shall be levied on up to 6.2 Acres of Property Owner Association Property. Tax- exempt status will be irrevocably assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property, its tax- exempt status will be revoked. No Public Property shall be exempt from Special Tax, except as required by law. Public Property or Property Owner Association Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth or fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property or Taxable Property Owner Association Property. F. APPEALS AND INTERPRETATIONS Any taxpayer may file a written appeal of the Special Tax on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant's property and/or provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City clerk, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator's determination. G. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2002 -01 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its fmancial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities Cost" means either $3.015 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 7 provide the public facilities to be provided by CFD No. 2002 -01 under the authorized bonding program for CFD No. 2002 -01, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News - Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News - Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities Cost minus (i) public facility costs previously paid from the Construction Fund, (ii) moneys currently on deposit in the Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance facilities costs. "Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. "Previously Issued Bonds" means all Bonds that have been issued by CFD No. 2002 -01 prior to the date of prepayment. 1. Prepayment in Full The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid and permanently satisfied as described herein; provided that a prepayment may be made only for Assessor's Parcels of Developed Property or Undeveloped Property for which a building permit has been issued, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. Ciry of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 8 • The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: ParaSraph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax applicable for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property (for which a building permit has been issued) to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for the entire CFD No. 2002 -01 based on the Developed Property Special Taxes which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 2002 -01, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Taxes at buildout of CFD No. 2002 -01 using the Backup Special Tax amount for the current Fiscal Year, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount "). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium "). City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 9 6. Compute the current Future Facilities Costs 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount "). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount (as defined below) less the Future Facilities Amount and the Administrative Fees and Expenses (as defined below) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount "). 12. Verify the administrative fees and expenses of CFD No. 2002 -01, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses "). 13. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit "). • 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount "). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 10 Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the construction fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 2002 -01. • The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2002 -01 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = PE x F. These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 11 remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 2002 -01 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF SPECIAL TAX The Special Tax shall be levied for the period necessary to fully satisfy the Special Tax Requirement, but in no event shall it be levied after Fiscal Year 2042 -43. K. \Clicnts2\Scal Bcach\ mcllo \efd2002- 1\rma\sbRMAIO.doc • City of Seal Beach September 10, 2002 CFD No. 2002 -01 (Heron Pointe) Page 12 EXHIBIT B CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) ASSIGNED SPECIAL TAX RATES FOR DEVELOPED PROPERTY Land Use Class - • ' . _ FY 2002 -03 Assigned f• - Description Special Tax [1] 1 Residential Property (? 4,000 SF) $5,350 per unit 2 Residential Property (3,750 to 3,999 SF) $5,078 per unit 3 Residential Property (3,500 to 3,749 SF) $4,900 per unit 4 Residential Property (< 3,500 SF) $4,570 per unit 5 Non - Residential Property $41,977 per Acre 9 [1] On each July 1, commencing July 1, 2003 and ending on July 1, 2012, the Assigned Special Tax for Developed Property shall be increased by two percent (2.00 %) of the amount in effect in the previous Fiscal Year. EXHIBIT C CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) MAXIMUM SPECIAL TAX FOR UNDEVELOPED PROPERTY, TAXABLE PUBLIC PROPERTY, AND TAXABLE PROPERTY OWNER ASSOCIATION PROPERTY • Description Fiscal Year 2002 -03 a . Maximum Special Tax 111 Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property $47,043 per Acre [1] On each July 1, commencing July 1, 2003 and ending on July 1, 2012, the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be increased by two percent (2.00 %) of the amount in effect in the previous Fiscal Year. • EXHIBIT D CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) BOUNDARY MAP f e O O O h C.) Q L y . 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( f)u WZis..° O a.CyZL°tZk' M I Ca LL1 CI °moo °�oQmev Attachment 3 Resolution Of The City Council Of The City Of Seal Beach To Establish City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe), To Establish An Appropriations Limit For The District, To Authorize, With Modifications, The Levy Of A Special Tax Within The District, To Call A Special Election Within The District And To Take Certain Other Actions • 707111 -2 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH TO ESTABLISH CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE), TO ESTABLISH AN APPROPRIATIONS LIMIT FOR THE DISTRICT, TO AUTHORIZE, WITH MODIFICATIONS, THE LEVY OF A SPECIAL TAX WITHIN THE DISTRICT, TO CALL A SPECIAL ELECTION WITHIN THE DISTRICT AND TO TAKE CERTAIN OTHER ACTIONS RECITALS: WHEREAS, the City Council (the "City Council ") of the City of Seal Beach, California (the "City "), has previously adopted Resolution No. 5049 stating its intention to conduct proceedings to form City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District ") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the "Act ") to finance certain public facilities. WHEREAS, a copy of Resolution No. 5049 setting forth a description of the proposed boundaries of the District, the facilities to be financed by the District, including incidental expenses, and the rate and method of apportionment of the special tax proposed to be levied within the District is on file in the office of the City Clerk of the City and, except to the extent modified by this Resolution, is incorporated herein by reference. WHEREAS, the City Council has previously adopted Resolution No. 5050 stating the City Council's intention, acting as the legislative body of the District, to authorize the issuance and sale of a series of bonds for the District in maximum aggregate principal amount of $5,000,000 to finance the cost of designing and constructing such public facilities. WHEREAS, Resolution Nos. 5049 and 5050 set September 23, 2002 as the date of a public hearing on the establishment of the District, the extent of the District, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax within the District, and the proposed debt issue. WHEREAS, a notice of the public hearing was published and was mailed to all landowners proposed to be included in the District in accordance with the Act. WHEREAS, prior to the public hearing there was filed with the City Council a report entitled "Community Facilities District Report — Mello -Roos Community Facilities Act of 1982 — City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe)" (the "Report") containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act. WHEREAS, at the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the District, the extent of the District, the furnishing of specified types ofpublic facilities within the District, the proposed rate and method of apportionment of the special tax, and the proposed debt issue were heard and a full and fair hearing was held. S7296/1085/706338.1 WHEREAS, at the public hearing evidence was presented to the City Council on the matters before it and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District, the levy of the special tax and the incurrence of bonded indebtedness therein. WHEREAS, the City Council desires to proceed with the establishment of the District and to make the necessary findings to incur the bonded indebtedness. WHEREAS, the City Council desires to hold a special election in the District at which time there will be submitted to the qualified electors of the District certain propositions relating to the authorization to levy a special tax within the District, the establishment of an appropriations limit for the District and the incurrence of a bonded indebtedness to pay for certain facilities. WHEREAS, the City Council has determined that there have been fewer than twelve registered voters residing in the proposed boundaries of the District for the period of ninety days prior to September 23, 2002 and that the qualified electors of the District are the landowners within the District. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Recitals. The above recitals are all true and correct. Section 2. Finding of Validity. Pursuant to Section 53325.1(b) of the Act, the City Council finds and determines that all of the proceedings prior hereto were valid and taken in conformity with the requirements of the law, and specifically the provisions of the Act. Section 3. Name of District. The City Council hereby establishes and declares the formation of a community facilities district pursuant to the Act to be designated "City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) ". Section 4. Modifications. The rate and method of apportionment of the Special Tax among parcels of real property of the District, is modified to be as shown in Exhibit `B," attached hereto and incorporated herein by reference, which includes sufficient detail to allow each resident or landowner within the proposed District to estimate the maximum amount such resident or owner will have to pay. The modifications do not cause an increase in the special tax against any parcel or parcels. Section 5. Facilities. The facilities proposed to be financed by the District under the Act shall consist of those facilities set forth on Exhibit "A," attached hereto and incorporated herein by reference (the "Facilities "). The estimated cost of the Facilities and incidental expenses to be financed is set forth in the Report, which estimates may change as the Facilities are designed or bid for construction. The City is authorized by the Act to contribute revenue to, or to construct or acquire the Facilities, all in accordance with the Act. The City Council finds that the proposed Facilities are necessary to meet the increased demand that will be placed upon public infrastructure as a result of new development within the District. 57296/1085/706338.1 -2- Section 6. No Majority Protest. The City Council hereby finds that written protests against the establishment of the District, against the furnishing of a specified type of facility within the District, or against the levying of a specified special tax within the District have not been filed by any property owner or registered voter within the boundaries of the District. Therefore, the City Council finds and declares that the special tax to be levied in the District has not been precluded by majority protest pursuant to Section 53324 of the Act. Section 7. Special Tax. Except where funds are otherwise available to pay for the Facilities and/or the principal and interest as it becomes due on bonds of the District issued to finance the Facilities, a special tax (the "Special Tax ") is hereby authorized, subject to approval by two- thirds of the votes cast within the District, to be levied annually in accordance with the procedures of the Act within the boundaries of the District sufficient to pay for the costs thereof, including incidental expenses. The Special Tax will be secured by the recordation of a continuing lien against all non - exempt property in the District and will be collected in the same manner as ordinary ad valorem property taxes and shall be subject to the same penalties, procedure, sale and lien in any case of delinquency as applicable for ad valorem property taxes; provided, however, such Special Tax may be collected in such other manner as may be provided by the City Council. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the District pursuant to Section 53314 of the Act and interest thereon. The proposed rate and method of apportionment of the Special Tax among parcels of real property in the District, in sufficient detail to allow each resident or landowner to estimate the maximum amount such resident or owner will have to pay, is shown in Exhibit `B ", attached hereto and incorporated herein by reference. The Special Tax is based upon the expected demand that each parcel will place on the Facilities and the benefit that each parcel derives from the right to access the Facilities and the City Council hereby determines such basis to be reasonable. In the case of any Special Tax to pay for the Facilities to be levied against any parcel used for private residential purposes: (i) the maximum Special Tax shall be specified as a dollar amount which shall be calculated and thereby established not later than the date on which the parcel is first subject to the tax because of its use for private residential purposes and which amount shall not be increased over time over two percent per year; (ii) the tax year after which no further Special Tax subject to this sentence shall be levied or collected shall be as set forth in Exhibit `B" hereto; and (iii) under no circumstances will the Special Tax levied against any parcel subject to this sentence be increased as a consequence of delinquency or default by the owner of any other parcel within the District by more than 10 percent. For the purposes hereof, a parcel is used for "private residential purposes" not later than the date on which an occupancy permit for private residential use is issued. Subject to the limitations set forth in the previous paragraph, in the event that a portion of the property within the District shall become exempt for any reason, wholly or partially, from the levy of the Special Tax, the City Council shall, on behalf of the District, cause the levy to be increased, subject to the limitation of the maximum Special Tax for a parcel as set forth in Exhibit `B," to the extent necessary upon the remaining property within the District which is not delinquent or exempt in order to yield the Special Tax revenues required for the purposes described herein. The City Council finds that there is not an ad valorem property tax currently being levied on property within the District for the exclusive purpose of paying principal or interest on bonds or S7296/1085/706338.1 -3- other indebtedness incurred to finance the construction of capital facilities which provide the same services to the territory of the District as are proposed to be provided by the Facilities to be financed by the District. Section 8. Notice of Special Tax Lien. Upon recordation of a notice of special tax lien with respect to the District pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all nonexempt real property in the District, and this lien shall continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and lien canceled in accordance with law or until collection of the Special Tax by the City Council ceases. Section 9. Appropriations Limit. An appropriations limit for the District is hereby established, subject to voter approval, as an amount equal to all the proceeds of the Special Tax collected annually within such District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population. Section 10. Agricultural, Timber or Livestock Uses. The City Council hereby finds and declares that all land within the District has been included in the District at the request of its owner. Therefore, the City Council finds that the District has been formed in compliance with Section 53325.6 of the Act. Section 11. Preparation of Annual Roll. The current Director of Finance, 211 Eighth Street, Seal Beach, CA 90740, (562) 431 -2527 is designated to be responsible for preparing annually, or authorizing a designee to prepare, a current roll of Special Tax levy obligations by assessor's parcel number and for estimating future Special Tax levies pursuant to Section 53340.2 of the Act. Section 12. Report. The Report is hereby approved and is made a part of the record of the public hearing regarding the formation of the District and is ordered to be kept on file in the office of the City Clerk and open for public inspection. Section 13. Special Tax Accountability Measures. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the City Council hereby establishes the following accountability measures pertaining to the levy by the District of the special tax described in Section 7 above: A. Such special tax shall be levied for the specific purposes set forth in Section 7 hereof. B. The proceeds of the levy of such special tax shall be applied only to the specific purposes set forth in Section 7 hereof. • C. The District shall establish an account or accounts into which the proceeds of such special tax shall be deposited. D. The City Manager, or his or her designee, acting for and on behalf of the District, shall annually file a report with the City Council as required pursuant to Government Code Section 50075.3. S7296/1085/706338.1 -4- Section 14. Election. The City Council herewith submits the establishment of the appropriations limit for the District and the levy of the Special Tax to the qualified electors of the District, such electors being the landowners within the District who are the owners of record on the date hereof, or the authorized representatives thereof, with each landowner having one vote for each acre or portion of acre owned. There is hereby called and ordered to be on September 23, 2002, or such later date as is consented to by the City Clerk and the landowners within the District, a special election for the purpose of submitting such propositions to the voters. The City Council hereby further directs that the ballot proposition relating to the levy of the Special Tax and the proposition relating to the incurring of a bonded indebtedness be combined into one ballot proposition. The City Clerk shall conduct the elections, shall give notice as required by law and shall procure such services and supplies as are necessary for the conduct of the election. Except as otherwise provided by the Act, the elections shall be conducted by personally delivered or mailed ballot and, except as otherwise provided by the Act, the elections shall be conducted in accordance with the provisions of law regulating elections of the City of Seal Beach insofar as such provisions are determined by the City Clerk to be applicable. • S7296/1085/706338.1 -5- PASSED, APPROVED AND ADOPTED this 23rd day of September, 2002. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 57296/1085/706338.1 -6- EXHIBIT "A" DESCRIPTION OF FACILITIES The cost of the facilities shall include incidental expenses, including the costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, costs incurred in order to carry out the authorized purposes of the District, any other expenses, incidental to the construction, completion and inspection of the authorized work and the attributable costs of engineering and inspection. The facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City and the officials thereof. Facilities Public improvements with a useful life of not less than five years including (i) street, sidewalk, street light, traffic signal, drainage, signage median and appurtenant improvements to Seal Beach Boulevard, Aldolpho Lopez Drive, and Heron Pointe, including, but not limited to, relocation of existing overhead utilities lines and construction of a joint trench in furtherance of public safety, (ii) water and sanitary improvements serving real property within the District, including, but not limited to, a sewer lift station, (iii) dry utility improvements and burd vaults serving the District, (iv) improvements to Gum Grove Park, including, but not limited to, landscaping and access improvements, (v) landscape improvements along Seal Beach Boulevard, (vi) sewer, water, park, storm drain, and transportation improvements to be funded through development fees charged by the City of Seal Beach in connection with the development of real property within the District. • S7296/1085/706338.1 EXHIBIT `B" S7296/1085/706338.1 RATE AND METHOD OF APPORTIONMENT FOR CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in the City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) ( "CFD No. 2002-01") and collected each Fiscal Year commencing in Fiscal Year 2002 -03, in an amount determined by the City Council of the City of Seal Beach, through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 2002 -01, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2002 -01: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with City, CFD No. 2002 -01 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2002 -01 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2002 -01 for any other administrative purposes of CFD No. 2002 -01, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County • designating parcels by Assessor's parcel number. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 1 "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C below. "Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by the City on behalf of CFD No. 2002 -01 under the Act. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 2002 - 01" means the City of Seal Beach Community Facilities District No. 2002- 01 (Heron Pointe). "City" means the City of Seal Beach. "Council" means the City Council of the City. "County" means the County of Orange. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction was issued after January 1, 2001 and prior to January 1 of the prior Fiscal Year. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Class" means any of the classes listed in Table 1 below. "Maximum Special Tax" means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non - Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for a non - residential use. "Outstanding Bonds" means all Bonds which are deemed to be outstanding under the Indenture. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property. For Taxable Public Property and Taxable Property Owner City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 2 Association Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Taxable Public Property or Taxable Property Owner Association Property, as applicable. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2002 -01 that was owned by a property owner association, including any master or sub - association, as of January 1 of the prior Fiscal Year. "Public Property" means, for each Fiscal Year, any property within CFD No. 2002 -01 that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, the State, the County, the City or any other public agency as of June 30 of the prior Fiscal Year; provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in • accordance with its use. To ensure that property is classified as Public Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later than June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2002 -01 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of CFD No. 2002 -01 facilities eligible under the Act; (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2002 -01 which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 3 "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2002 -01 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX 1. Developed Property a. Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Fiscal Year 2002 -03 Assigned Special Tax for each Land Use Class is shown below in Table 1. TABLE 1 Fiscal Year 2002 -03 Assigned Special Taxes for Developed Property in Community Facilities District No. 2002 -01 (Heron Pointe) 'Land Use " Class "° a Des Residential Floor Area Assigned Special Tax ' • 1 Residential Property • ? 4,000 s.f. $5,350 per unit • 2 Residential Property 3,750 — 3,999 s.f. $5,078 per unit 3 Residential Property 3, 500 — 3,749 s.f. $4,900 per unit 4 Residential Property < 3,500 s.f. $4,570 per unit City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 4 Land Us ' Description Residential Floor Area Assigned Special Tax Class ,t 5 Non - Residential Property NA $41,977 per Acre c. Backup Special Tax The Fiscal Year 2002 -03 Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $41,977 per Acre. d. Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Assigned Tax or Backup Special Tax subsequent to July 1, 2012. 2. Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property a. Maximum Special Tax The Fiscal Year 2002 -03 Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be $47,043 per Acre. b. Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property subsequent to July 1, 2012. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX . Commencing with Fiscal Year 2002 -03 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equal the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 5 First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at up to the Maximum Special Tax for Taxable Property Owner Association Property; and Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property at up to the Maximum Special Tax for Taxable Public Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the CFD. E. EXEMPTIONS No Special Tax shall be levied on up to 6.2 Acres of Property Owner Association Property. Tax - exempt status will be irrevocably assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property, its tax - exempt status will be revoked. No Public Property shall be exempt from Special Tax, except as required by law. Public Property or Property Owner Association Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth or fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property or Taxable Property Owner Association Property. F. APPEALS AND INTERPRETATIONS Any taxpayer may file a written appeal of the Special Tax on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 6 before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant's property and/or provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City clerk, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator's determination. G. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2002 -01 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities Cost" means either $3.015 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 2002 -01 under the authorized bonding program for CFD No. 2002 -01, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News - Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News - Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities Cost minus (i) public facility costs previously paid from the Construction Fund, (ii) moneys currently on deposit in the Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance facilities costs. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 7 "Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. "Previously Issued Bonds" means all Bonds that have been issued by CFD No. 2002 -01 prior to the date of prepayment. 1. Prepayment in Full The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid and permanently satisfied as described herein; provided that a prepayment may be made only for Assessor's Parcels of Developed Property or Undeveloped Property for which a building permit has been issued, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 8 The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax applicable for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property (for which a building permit has been issued) to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for the entire CFD No. 2002 -01 based on the Developed Property Special Taxes which could be charged in the cur ent Fiscal Year on all expected development through buildout of CFD No. 2002 -01, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Taxes at buildout of CFD No. 2002 -01 using the Backup Special Tax amount for the current Fiscal Year, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount "). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium "). 6. Compute the current Future Facilities Costs City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 9 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount "). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount (as defined below) less the Future Facilities Amount and the Administrative Fees and Expenses (as defined below) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount "). 12. Verify the administrative fees and expenses of CFD No. 2002 -01, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses "). 13. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit'). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit "). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount "). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the construction fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 2002 -01. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 10 The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2002 -01 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 2002 -01 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. TERM OF SPECIAL TAX City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 11 The Special Tax shall be levied for the period necessary to fully satisfy the Special Tax Requirement, but in no event shall it be levied after Fiscal Year 2042 -43. K: \Clients2 \Seal Beach\mello\cfd2002- I \nna\sbRMAIO.doc City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 12 Attachment 4 Resolution Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe), To Declare The Necessity To Incur A Bonded Indebtedness Within That District And To Order Submitted To The Qualified Electors Of The District Propositions Relating To The District 707111 -2 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH, CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE), TO DECLARE THE NECESSITY TO INCUR A BONDED INDEBTEDNESS WITHIN THAT DISTRICT AND TO ORDER SUBMITTED TO THE QUALIFIED ELECTORS OF THE DISTRICT PROPOSITIONS RELATING TO THE DISTRICT RECITALS: WHEREAS, the City Council (the "City Council ") of the City of Seal Beach, California (the "City "), has previously adopted Resolution No. 5049 stating its intention to conduct proceedings to form City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District ") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the "Act ") to finance certain public facilities. WHEREAS, the City Council has previously adopted Resolution No. 5050 stating its intention, in its capacity as the legislative body of the District, to authorize the issuance and sale of a series of bonds in the maximum aggregate principal amount of $5,000,000. WHEREAS, Resolution Nos. 5049 and 5050 set September 23, 2002 as the date of a public hearing on the establishment of the District, the extent of the District, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax within the District, and the proposed debt issue. WHEREAS, a notice of the public hearing was published and mailed to all landowners proposed to be included in the District in accordance with the Act. WHEREAS, prior to the public hearing there was filed with the City Council a report containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act. WHEREAS, at the public hearing, all persons desiring to be heard on all matters pertaining to the establishment of the District, to the extent of the District, to the furnishing of specified types of public facilities within the District, to the proposed rate and method of apportionment of the special tax, and to the proposed debt issues were heard and a full and fair hearing was held. WHEREAS, at the public hearing evidence was presented to the City Council on the matters before it and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District, the levy of the special tax and the incurrence of bonded indebtedness therein. WHEREAS, subsequent to the public hearing, the City Council adopted Resolution No. , ordering certain modifications in connection with the rate and method of apportionment of the special tax for the District, establishing the District and calling a special election in the District on September 23, 2002 (the "Resolution of Formation "). 57296/1085/706351.1 WHEREAS, the City Council desires to hold a special election the District at which time there will be submitted to the qualified electors of the District certain propositions relating to the authorization to levy a special tax, the establishment of an appropriations limit for the District, and the incurring of a bonded indebtedness to pay for certain facilities to serve the District. WHEREAS, the City Council has determined that there have been fewer than twelve registered voters residing in the proposed boundaries of the District for the period of 90 days prior to September 23, 2002 and that the qualified electors of the District are the landowners within the District. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Necessary to Incur Bonded Indebtedness. The City Council hereby declares that it is necessary to incur a bonded indebtedness for the District in an aggregate principal amount not to exceed $5,000,000 as authorized under the terms and provisions of the Act. Section 2. Purpose of Bonded Indebtedness. The bonded indebtedness will be incurred for the purpose of financing the costs of designing, acquiring and constructing the Facilities, as defined in the City's Resolution No. 5049 and the Resolution of Formation, and incidental expenses, including, but not limited to, the financing of the costs associated with the issuance of the bonds and all other costs necessary to finance the Facilities which are permitted to be financed pursuant to the Act. Section 3. Bond Terms. Bonds in the maximum principal amount of $5,000,000 are hereby authorized for the District, subject to voter approval. The bonds shall bear interest at a maximum interest rate of 12 percent per annum or such rate not in excess of the maximum rate permitted by law at the time the bonds are issued, payable semiannually or in such other manner as the City Council or its designee shall determine, with the actual rate or rates and time of payment of such interest to be determined by the City Council or its designee at the time or times of sale of said bonds. The term of the bonds shall be determined pursuant to a resolution of the City Council authorizing the issuance of such series, but such term shall in no event exceed 31 years from the date of issuance of such series of bonds or such longer term as is then permitted by law. Section 4: Accountability Measures. Pursuant to and in compliance with the provisions of Article 1.5 (commencing with Section 53410) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, the City Council hereby establishes the following accountability measures pertaining to any bonded indebtedness incurred by or on behalf of the District: A. Such bonded indebtedness shall be incurred for the specific single purpose set forth in Section 2 above. B. The proceeds of any such bonded indebtedness shall be applied only to the specific purpose identified in Section 2 above. C. The document or documents establishing the teens and conditions for the issuance of any such bonded indebtedness shall provide for the creation of an S7296/I 085/706351.1 -2- account or accounts into which the proceeds of such indebtedness shall be deposited. D. The City Manager, or his or her designee, acting for and on behalf of the District, shall annually file a report with the City Council as required by Government Code Section 53411. Section 5. Election. The proposition related to the incurring of the bonded indebtedness and the proposition relating to the levy of the Special Tax shall be combined into one ballot proposition, and shall be submitted to the qualified voters of the District, together with a proposition to establish an appropriations limit for the District at a special election. If the combined proposition for the levy of the Special Tax and the incurring of the bonded indebtedness and the proposition for the establishment of the appropriations limit receive the approval of more than two- thirds (2/3) of the votes cast on the proposition, bonds may be authorized, issued and sold for the purposes set forth herein, the Special Tax may be levied as provided for in the Resolution of Formation and the appropriations limit may be established as provided for in the Resolution of Formation. Section 6. Electors Determined. The City Council finds, based on information provided by the Registrar of Voters of the County of Orange, that fewer than 12 registered voters have been registered to vote within the territory of the District for each of the 90 days proceeding the close of the public hearing heretofore conducted and concluded by the City Council for the purposes of these proceedings. Accordingly, and pursuant to Section 53326 of the Act, the City Council finds that for purposes of these proceedings the qualified electors are the landowners within the District. Each landowner shall have one vote for each acre or portion thereof that he or she owns within the District, as provided in Section 53326 of the Act. The City Council finds that there is a single qualified elector in the District. Section 7. Election Official. The City Clerk is hereby designated as the official to conduct the election. It is hereby acknowledged that the City Clerk has on file a certified map of the boundaries of the District, and a sufficient description to allow the City Clerk to determine the boundaries of the District. Section 8. Waiver of Election Requirements. The City Clerk, acting as election official, has received a Petition from the sole qualified elector of the District indicating its consent to waiver of any time limits specified in Section 53326 of the Act and of other requirements pertaining to the conduct of the election, which petition is on file with the City Clerk. The City Clerk has submitted a notice indicating her concurrence, as election official conducting the election, with such waiver. Consequently, all statutory requirements regarding the timing for the election and other election requirements set forth in such Petition are waived. Section 9. Election Date. The time for notice having been waived by the sole qualified elector, the date of the special election shall be September 23, 2002 in the City Council Chambers, 211 8th Street, Seal Beach, California, 90740, immediately following the adoption of this Resolution or such later date as is consented to by the City Clerk and the landowner within the District. The voted ballots shall be returned to the City Clerk immediately following the adoption of this Resolution, and when the qualified voter has voted the election shall be closed. 57296/1085/706351.1 -3- The City Clerk is authorized to conduct the election following the adoption of the Resolution of Formation and this Resolution, and all ballots shall be received by, and the City Clerk shall close the election by 11:30 p.m. on the election day; provided the election shall be closed at such earlier time as all qualified electors have voted as provided in Section 53326(d) of the Act. Section 10. Mail Ballot. Pursuant to the Act, the election shall be conducted by mail ballot pursuant to the California Elections Code. Except as otherwise provided by the Act, the election shall be conducted in accordance with the provisions of law regulating elections of the City of Seal Beach insofar as such provisions are determined by the City Clerk to be applicable. Section 11. Ballot. The City Council acknowledges that the City Clerk has caused to be delivered to the qualified elector of the District a ballot in the form required by law. The ballot indicates the number of votes to be voted by the landowner to which it pertains. The ballot was accompanied by all supplies and written instructions necessary for the use and return of the ballot. The envelope to be used to return the ballot was enclosed with the ballot, had the return postage prepaid, and contained the following: (a) the name of the landowner, (b) the address of the landowner, (c) a declaration, under penalty of perjury, stating that the voter is the owner of record or the authorized representative of the landowner entitled to vote and is the person whose name appears on the identification envelope, (d) the printed name and signature of the voter, (e) the address of the voter, (f) the date of signing and place of execution of the declaration described as item "c" above, and(g) a notice that the envelope is an official ballot and is to be opened only by the Canvassing Board. The ballot proposals to be submitted to the qualified voters of the District at the election shall generally be as follows: PROPOSITION A Shall the City of Seal Beach, on behalf of City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District "), subject to the accountability measures provided for in Resolution Nos. and of the City Council of the City of Seal Beach, incur an indebtedness and issue a series of bonds in the maximum annual principal amount of $5,000,000 with interest at a rate or rates not to exceed the maximum interest rate permitted by law, to finance the facilities and incidental expenses described in Resolution Nos. and of the City Council of the City of Seal Beach, and shall a special tax with a rate and method of apportionment as provided in Resolution Nos. and of the City Council of the City of Seal Beach be levied annually on lands within the District to pay for the facilities, incidental expenses and other purposes described in Resolution Nos. and , including the payment of principal and interest on bonds issued to finance the facilities, incidental expenses, and the costs of the City in administering the District? PROPOSITION B Shall City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District ") establish an Article XIIIB appropriations limit for the District as an amount equal to all the proceeds of the Special Tax collected annually within the District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population? S7296/1085/706351.1 -4- • Section 12. Return of Ballots. Ballots shall be returned to the City Clerk, acting as election official, no later than the close of the election. Section 13. Vote. The appropriate mark placed in the voting square after the word "YES" shall be counted in favor of the adoption of the proposition, and the appropriate mark placed in the voting square after the word "NO" in the manner as authorized, shall be counted against the adoption of said proposition. Section 14. Agreements. That certain Funding and Acquisition Agreement by and between the City and WL Homes, a Delaware Limited Liability Company, now on file in the office of the City Clerk is hereby approved and the Mayor or the City Manager is hereby authorized and directed to execute and deliver the agreement substantially in the form on file in the office of the City Clerk and presented at this meeting, with such additions thereto, or changes or insertions therein as may be approved by the Mayor or City Manager (such approval to be exclusively evidenced by such execution and delivery). PASSED, APPROVED AND ADOPTED this 23` day of September, 2002. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney S7296/1085/706351.1 -5- EXHIBIT "A" BALLOT S7296/1085/706351.1 -6- City of Seal Beach Community Facilities District No. 2002 -1 (Heron Pointe) OFFICIAL BALLOT Special Tax Election This ballot is for a special landowner election. You must return this ballot in the enclosed postage paid envelope to the office of the City Clerk of the City of Seal Beach no later than the hour of 11:30 p.m. on September 23, 2002 either by mail or in person. The City Clerk =s address is City Hall, 211 8 Street, Seal Beach, CA 90740. Or you may hand deliver the ballot to the City Clerk in the City Council Chambers211 8' Street, Seal Beach, CA 90740 not later than 11:30 p.m. on September 23, 2002. To vote, mark a cross (X) on the voting line after the word AYES@ or after the ANO @. All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Seal Beach and obtain another. PROPOSITION A: Shall City of Seal Beach Community Facility District No. 2002 -1 (Heron Pointe) (the "District "), subject to the accountability measures provided for in YES Resolution Nos. and of the City Council of the City of Seal Beach incur an indebtedness and issue a series of bonds with interest at a rate or rates not to exceed the NO maximum interest rate permitted by law, to fmance the facilities and incidental expenses described m Resolution No. and of the City Council of the City of Seal Beach and shall a special tax with a rate and method of apportionment as provided in Resolution Nos. and of the City Council of the City of Seal Beach for the District be levied to pay for the facilities, incidental expenses and other purposes described in Resolution Nos. and , including the payment of principal and interest on bonds issued to fmance the facilities and incidental expenses? PROPOSITION B: Shall City of Seal Beach Community Facilities District No. 2002 -1 (Heron Pointe) (the "District ") establish an Article XIIIB appropriations limit for the District as an amount equal to all the proceeds of the Special Tax collected annually within the YES District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population? NO Number of Votes: 11026 \0004 \658372.1 • N O 0 N M N w 0 E N e. O 0 71- 'b 0 Z p s b. az CC: ili on 0 15 W E 0 04 PO 0 �i �I' O o V1 0 ^ O .0 4N N O 6 C (3.1) . 0 _ Q ›..,� � V 0--1 I—I ,—.4 4) Y -c) �N c/) ¢g CA 0 g M■I WI VJ 0 O N b O > 0.,. o > }I C Z �Yoa� °' . te a U U O � � " c+4 0 N ° r. A w ai 2 r- Z °' a U b 00 E -0_80 0 O 1 p t W W c. 0 ,w b . -c o 0 O 0 ti 0 a. E " P" z Q 'v) ,}>, v� O 0 w �; o i. �, 3 w P4 ..{....yid 0 r 4' 6 g O oo 01 N A 0 >> > r r O O p. C4.4 0. b v.4 04 0002 Attachment 5 A Resolution Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) To Certify The Results Of The September 23, 2002 Special Tax And Bond Election 707111 -2 RE SOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH, CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) TO CERTIFY THE RESULTS OF THE SEPTEMBER 23, 2002 SPECIAL TAX AND BOND ELECTION RECITALS: WHEREAS, the City Council of the City of Seal Beach called and duly held an election on September 23, 2002 for City of Seal Beach Facilities District No. 2002 -01 (Heron Pointe) (the "District ") pursuant to Resolution No. and Resolution No. for the purpose of presenting to the qualified elector of the District the propositions which are attached hereto as Exhibits A and incorporated herein by reference. WHEREAS, there has been presented to this City Council a certificate of the City Clerk canvassing the results of the elections, a copy of which is attached hereto as Exhibit B and incorporated herein. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Recitals. Each of the above recitals is true and correct. Section 2. Results of Election. Propositions A and B presented to the qualified elector of the District on September 23, 2002 were approved by more than two - thirds of the votes cast at the election and Propositions A and B each have carried. The City Council, acting in its capacity as legislative body of the District, is hereby authorized to levy on the land within the District the special tax described in Proposition A for the purposes described therein and to take the necessary steps to levy the special tax authorized by Proposition A and to issue bonds in an amount not to exceed $5,000,000 as specified in Proposition A. Section 3. Notice of Special Tax Lien. The City Clerk is hereby authorized and directed to record in the Office of the County Recorder of Orange County within fifteen days of the date hereof a notice of special tax lien in the form required by Streets and Highways Code Section 3114.5. S7296/1085/706353.1 PASSED, APPROVED AND ADOPTED this 23rd day of September, 2002. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney S7296/1085/706353.1 -2- • EXHIBIT A PROPOSITION A Shall the City of Seal Beach, on behalf of City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District "), subject to the accountability measures provided for in Resolution Nos. and of the City Council of the City of Seal Beach, incur an indebtedness and issue a series of bonds in the maximum annual principal amount of $5,000,000 with interest at a rate or rates not to exceed the maximum interest rate permitted by law, to finance the facilities and incidental expenses described in Resolution Nos. and of the City Council of the City of Seal Beach, and shall a special tax with a rate and method of apportionment as provided in Resolution Nos. and of the City Council of the City of Seal Beach be levied annually on lands within the District to pay for the facilities, incidental expenses and other purposes described in Resolution Nos. and , including the payment of principal and interest on bonds issued to finance the facilities, incidental expenses, and the costs of the City in administering the District? PROPOSITION B Shall City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District ") establish an Article XIIIB appropriations limit for the District as an amount equal to all the proceeds of the Special Tax collected annually within the District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population? 57296/1085/706353.1 EXHIBIT A EXHIBIT B CERTIFICATE OF THE CITY CLERK AS TO THE RESULTS OF THE CANVASS OF THE ELECTION RETURNS CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 I, Joanne Yeo, City Clerk of the City of Seal Beach, hereby certify that I examined the returns of the Special Tax and Bond Election for the City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District "). The election was held in the chambers of the City Council at 211 8 Street, Seal Beach, California 90740 on September 23, 2002. One ballot was returned. I further certify that the results of said election and the number of votes cast for and against Propositions A and B are as follows: Proposition A Proposition B Yes: Yes: No: No: Total: Total: IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND this 23rd day of September, 2002. By: City Clerk City of Seal Beach S7296/1085/706353.1 EXHIBIT B Attachment 6 An Ordinance Of The City Council Of The City Of Seal Beach, California, Acting In Its Capacity As The Legislative Body Of City Of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) Authorizing The Levy Of A Special Tax Within That District • 707111 -2 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SEAL BEACH, CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE) AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN THAT DISTRICT RECITALS: WHEREAS, the City Council (the "City Council ") of the City of Seal Beach, California (the "City "), has previously adopted Resolution No. 5049 stating its intention to conduct proceedings to form City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) (the "District ") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the "Act ") to finance certain public facilities. WHEREAS, the City Council has previously adopted Resolution No. 5050 stating the City Council's intention, acting as the legislative body of the District, to authorize the issuance and sale of a series of bonds in the maximum aggregate principal amount of $5,000,000. WHEREAS, Resolution Nos. 5049 and 5050 set September 23, 2002 as the date of a public hearing on the establishment of the District, extent of the District, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax, and the proposed debt issue. WHEREAS, a notice of the public hearing was published and mailed to all landowners proposed to be included in the District in accordance with the Act. WHEREAS, prior to the public hearing there was filed with the City Council a report entitled "Community Facilities District Report — Mello -Roos Community Facilities Act of 1982 — City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe)" (the "Report") containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act. WHEREAS, at the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the District, the extent of the District, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax, and the proposed debt issues were heard and a full and fair hearing was held. WHEREAS, at the public hearing evidence was presented to the City Council on the matters before it and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District, the levy of the special tax and the issuance of bonded indebtedness therein. WHEREAS, subsequent to the public hearing, the City Council adopted Resolution No. which approved certain modifications in connection with the rate and method of S7296/1085/706355.1 _ apportionment of the special tax for the District, established the District and authorized the levy of a special tax within the District. WHEREAS, subsequent to the public hearing, the City Council also adopted Resolution No. which determined the necessity to incur bonded indebtedness in the maximum principal amount of $5,000,000. WHEREAS, on September 23, 2002, an election was held within the District at which the qualified electors of the District approved the establishment of an appropriations limit for the District, the incurrence of bonded indebtedness and the levy of a special tax within the District. WHEREAS, on September 23, 2002, the City Council adopted Resolution No. which certified the results of the September 23, 2002 election conducted by the City Clerk, which results showed that more than two- thirds of the votes cast in the District were in favor of the proposition to establish an appropriations limit for the District, incur bonded indebtedness and levy the special tax. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Recitals. The above recitals are all true and correct. Section 2. Authorization of Levy of Special Tax. By passage of this Ordinance, the City Council authorizes the levy of a special tax within the District at the maximum rate and in accordance with the rate and method of apportionment set forth for in Exhibit B to Resolution No. , which for reference purposes is attached hereto as Exhibit A. Section 3. Annual Rate Determination. The City Council is hereby further authorized to determine on or before August 10 of each year, or such other date as is established by law or by the County Auditor - Controller of the County of Orange, the specific special tax to be levied on each parcel of land in the District, except that the special tax rate to be levied shall not exceed the maximum rates set forth in Exhibit A, but the special tax may be levied at a lower rate. Section 4. Exemption of Government Property. Properties or entities of the state, federal, or other local governments shall be exempt from the above - referenced and approved special tax only to the extent set forth in Exhibit A hereto, and otherwise shall be subject to tax consistent with the provisions of Section 53317.3 and 53317.5 of the Act. Section 5. Use of Collections. All of the collections of the special tax shall be used only as provided for in the Act and in Resolution No. . The special tax shall be levied only so long as needed for its purpose as described in Resolution No. Section 6. Collection. The special tax shall be collected in the same manner as ordinary ad valorem taxes and shall be subject to the same penalties and the same procedure, sale and lien in any case of delinquency as applicable for ad valorem property taxes; provided, however, that the special tax may be collected in such other manner as may be provided by the City Council. In addition, the provisions of Section 53356.1 of the Act shall apply to any delinquent Special Tax payments. S7296/1085/706355.1 -2- Section 7. Authorization. The specific authorization for adoption of this Ordinance is pursuant to the provisions of Section 53340 of the Act. Section 8. Certification. The City Clerk shall certify to the passage of this Ordinance and cause it to be published or posted in accordance with law. PASSED, APPROVED AND ADOPTED this 23r day of September, 2002. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney S7296/1085/706355.1 -3- RATE AND METHOD OF APPORTIONMENT FOR CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-01 (HERON POINTE) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in the City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) ( "CFD No. 2002-01") and collected each Fiscal Year commencing in Fiscal Year 2002 -03, in an amount determined by the City Council of the City of Seal Beach, through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 2002 -01, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2002 -01: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2002 -01 or any designee thereof of complying with City, CFD No. 2002 -01 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2002 -01 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2002 -01 for any other administrative purposes of CFD No. 2002 -01, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's parcel number. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 1 "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C below. "Bonds" means any bonds or other debt (as defined in Section 53317(d) ofthe Act), whether in one or more series, issued by the City on behalf of CFD No. 2002 -01 under the Act. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 2002 -01" means the City of Seal Beach Community Facilities District No. 2002- 01 (Heron Pointe). "City" means the City of Seal Beach. "Council" means the City Council of the City. "County" means the County of Orange. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction was issued after January 1, 2001 and prior to January 1 of the prior Fiscal Year. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Class" means any of the classes listed in Table 1 below. "Maximum Special Tax" means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non- Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for a non - residential use. "Outstanding Bonds" means all Bonds which are deemed to be outstanding under the Indenture. • "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property. For Taxable Public Property and Taxable Property Owner City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 2 Association Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Taxable Public Property or Taxable Property Owner Association Property, as applicable. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2002 -01 that was owned by a property owner association, including any master or sub - association, as of January 1 of the prior Fiscal Year. "Public Property" means, for each Fiscal Year, any property within CFD No. 2002 -01 that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, the State, the County, the City or any other public agency as of June 30 of the prior Fiscal Year; provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. To ensure that property is classified as Public Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later than June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2002 -01 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of CFD No. 2002 -01 facilities eligible under the Act; (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2002 -01 which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 3 "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2002 -01 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX 1. Developed Property a. Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Fiscal Year 2002 -03 Assigned Special Tax for each Land Use Class is shown below in Table 1. TABLE 1 Fiscal Year 2002 -03 Assigned Special Taxes for Developed Property in Community Facilities District No. 2002 -01 (Heron Pointe) Land Use Description . Residential Floor Area Assigned Special Class ra _re • • 1 Residential Property > 4,000 s.f. $5,350 per unit 2 Residential Property 3,750 — 3,999 s.f. $5,078 per unit 3 Residential Property 3, 500 — 3,749 s.f. $4,900 per unit 4 Residential Property < 3,500 s.f. $4,570 per unit City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 4 Land Uses • Description Residential Floor Area Assigned Special Tax Class • „ , 5 Non - Residential Property NA $41,977 per Acre c. Backup Special Tax The Fiscal Year 2002 -03 Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $41,977 per Acre. d. Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Assigned Tax or Backup Special Tax subsequent to July 1, 2012. 2. Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property a. Maximum Special Tax The Fiscal Year 2002 -03 Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be $47,043 per Acre. b. Increase in the Maximum Special Tax • On each July 1, commencing on July 1, 2003 and through and including July 1, 2012, the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be increased by an amount equal to two percent (2 %) of the amount in effect for the previous Fiscal Year. There will be no increase in the Maximum Special Tax for Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property subsequent to July 1, 2012. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002 -03 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equal the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 5 First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at up to the Maximum Special Tax for Taxable Property Owner Association Property; and Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property at up to the Maximum Special Tax for Taxable Public Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the CFD. E. EXEMPTIONS No Special Tax shall be levied on up to 6.2 Acres of Property Owner Association Property. Tax- exempt status will be irrevocably assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property, its tax - exempt status will be revoked. No Public Property shall be exempt from Special Tax, except as required by law. Public Property or Property Owner Association Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth or fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property or Taxable Property Owner Association Property. F. APPEALS AND INTERPRETATIONS Any taxpayer may file a written appeal of the Special Tax on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 6 before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant's property and/or provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City clerk, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator's determination. G. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2002 -01 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities Cost" means either $3.015 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 2002 -01 under the authorized bonding program for CFD No. 2002 -01, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News - Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD - Administrator that is reasonably comparable to the Engineering News - Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities Cost minus (i) public facility costs previously paid from the Construction Fund, (ii) moneys currently on deposit in the Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance facilities costs. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 7 "Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the Indenture after the first interest and /or principal payment date following the current Fiscal Year. "Previously Issued Bonds" means all Bonds that have been issued by CFD No. 2002 -01 prior to the date of prepayment. 1. Prepayment in Full The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid and permanently satisfied as described herein; provided that a prepayment may be made only for Assessor's Parcels of Developed Property or Undeveloped Property for which a building permit has been issued, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 8 The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax applicable for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property (for which a building permit has been issued) to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for the entire CFD No. 2002 -01 based on the Developed Property Special Taxes which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 2002 -01, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Taxes at buildout of CFD No. 2002 -01 using the Backup Special Tax amount for the current Fiscal Year, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount "). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium "). 6. Compute the current Future Facilities Costs City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 9 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount "). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount (as defined below) less the Future Facilities Amount and the Administrative Fees and Expenses (as defined below) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount "). 12. Verify the administrative fees and expenses of CFD No. 2002 -01, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses "). 13. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit'). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit "). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount "). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the construction fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 2002 -01. City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 10 • The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2002 -01 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = P x F. These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 2002 -01 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. TERM OF SPECIAL TAX City of Seal Beach September 19, 2002 CFD No. 2002 -01 (Heron Pointe) Page 11 The Special Tax shall be levied for the period necessary to fully satisfy the Special Tax Requirement, but in no event shall it be levied after Fiscal Year 2042 -43. K: \Clients2 \Seal Beach\mello\cfd2002- I \nna\sbRMA l0.doc r City of Seal Beach September 19, 2002 - CFD No. 2002 -01 (Heron Pointe) Page 12 PLANNING DEPARTMENT v 1,,,, �4P0ggT- 9,, y'. O C 9� P. Q . ?C� 2119 , . °U" , cPi M emo randum To: Mayor Larson and Members of the City Council Attention: John B. Bahorski, City Manager Quinn Barrow, City Attorney Mac Cummins, Associate Planner /Special Projects Manager From: Lee Whittenberg, Director of Development Services , Date: September 20, 2002 - SUBJECT: AGENDA ITEM "Y" - ESTABLISHMENT OF COMMUNITY FACILITIES DISTRICT # 2002 -01 (IRON POINTE) Attachment 4 of the Staff Report, Proposed Resolution No. 5064, determines the necessity to incur bonded indebtedness in an amount not to exceed $5,000,000.00 and calls for the appropriate election. Section 14 of this resolution also authorizes the Mayor or the City Manager to execute a "Funding and Acquisition Agreement ". A copy of this agreement was not included in the Agenda Packet and is provided as an attachment for your information. Attachment: City of Seal Beach Community Facilities District No. 2002 -01 (Heron Pointe) - Funding and Acquisition Agreement * * * * C \My Documents\John Laing Homes\Funding & Acquisition Agreement Memo.doc\LW\09 -20 -02 ■ CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE) FUNDING AND ACOUISITION AGREEMENT THIS AGREEMENT is made and entered into as of the day of , 2002, by and between the CITY OF SEAL BEACH, a municipal corporation organized and existing under the constitution and laws of the State of California (hereinafter referred to as the "City ") and WL HOMES, LLC, a Delaware Limited Liability Company (hereinafter referred to as the "Landowner "). RECITALS A. By its Resolution No. 5049 and its Resolution No. 5050 (the "Resolutions of Intention "), the City Council of the City of Seal Beach has initiated proceedings for the establishment of a community facilities district pursuant to the Mello -Roos Community Facilities Act of 1982 , as amended, being Chapter 2.5 of Division 2 of Title 5 (commencing with Section 53311) of the Government Code of the State of California (the "Act "). The Resolutions of Intention state (i) the City's intent to form Community Facilities District No. 2002 -01 (Heron Pointe) (the "District "), (ii) the City's intent to levy a special tax (the "Special Tax ") against properties located within the District to fund the acquisition of certain improvements (the "Improvements "), to reimburse the Landowner for money advanced by the Landowner to pay certain development fees charged by the City and used by the City to finance improvements (the "Development Fees "), and to fund certain costs incidental to the issuance of bonds and the formation of the District (the "Incidental Expenses "); (iii) the City's intent to incur bonded indebtedness for the purpose of financing the Improvements, the Development Fees; and the Incidental Expenses; and (iv) the City's intent to take certain related actions. The Improvements, the Development Fees and the Incidental Expenses are more completely described in Exhibit "A" attached hereto and incorporated herein by reference. B. The Landowner is the owner of all of the land located in the District (such area of land hereinafter referred to as the "Property" is shown on Exhibit `B" attached hereto and incorporated herein by reference). C. The City is authorized by Section 53313.5 of the Act to acquire and finance the acquisition of authorized public facilities pursuant to the requirements of the Act. D. The purpose of this Agreement is (i) to provide for coordination between the City and the Landowner with regard to the design of the Improvements (as described in Exhibit "A" hereto), the construction of the Improvements, and the acquisition of the Improvements by the City from the Landowner when all of the construction thereof has been completed by the Landowner to the satisfaction of the City and when bond proceeds become available to the City, (ii) to provide for the reimbursement of the Development Fees, following the completion and acquisition of the C: \My Documents\John Laing Homes\Acquisition Agreement Heron Pointe doc \LW\09 -20 -02 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 Improvements, to the extent remaining bond proceeds are available for this purpose, and (iii) to provide for certain other matters related to the design, construction and acquisition of the Improvements. E. The Landowner has expertise in the construction of public facilities of the character of the Improvements, and the City has determined that it will obtain no advantage from undertaking the construction of the Improvements and that the Improvements may be constructed by the Landowner as if they had been constructed under the direction and supervision or under the authority of the City. COVENANTS NOW, THEREFORE, in consideration of the preceding recitals and the mutual promises and covenants hereinafter contained, the parties agree as follows: Section 1. Construction. The Landowner has commenced or will commence and will complete the construction of the- Improvements at its sole cost. The City has no financial obligation to construct the Improvements and all expenses for the Improvements, including associated incidental expenses, shall be the obligation of the Landowner. The City shall have the right to review and approve detailed plans and specifications, including as-built plans, (hereinafter the "Plans and Specifications ") prepared at the expense of the Landowner, for construction of the Improvements. As required by Section 53313.5 of the Act, all Improvements to be acquired from the Landowner must be constructed as if they has been constructed under the direction and supervision, or under the authority of, the City, including, but not limited to (i) requirements that all Improvements be constructed by contractors and/or subcontractors paying prevailing wages, as determined by the Director of the Department of Industrial Relations pursuant to Section 1770, et seg. of the Labor Code of the State of California and (ii) competitive bidding requirements pursuant to Section 1720 of the Labor Code. All Improvements to be acquired from the Landowner must (i) be completed in accordance with the Plans and Specifications as such Plans and Specifications have been approved by all appropriate City departments, (ii) satisfy all requirements customarily imposed upon subdividers or owners by the City in such circumstances, (iii) be completed prior to the termination of this Agreement under Section 26 of this Agreement, and (iv) be constructed in compliance with all applicable federal, state, and local laws, rules, and regulations (collectively, the "Improvement Requirements "). The Landowner shall be responsible for entering into all contracts required for the construction of the Improvements, including any change orders necessary to complete construction. The Landowner shall comply with all policies of the City regarding bidding of the contracts. All such contracts and any changes to the Plans and Specifications shall be submitted to the City Engineer for review and approval as to cost and quantity and quality of work. Acquisition Agreement Heron Pointe 2 1 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 Section 2. Construction Management. At the option of the City, the City may retain the services of a firm of civil engineers specializing in the management of public infrastructure projects (the "Construction Manager "), which shall consult with the Landowner and the City in coordinating and supervising the scheduling of the construction of the Improvements. Alternatively, the City Engineer or his or her designee may provide these consultation, coordination, and supervision services. Section 3. Inspection of Improvements. The City shall inspect and evaluate the Improvements to insure that they have been constructed in accordance with the Plans and Specifications. The City's personnel shall have access to the site of the Improvements at all reasonable times for the purpose of accomplishing such inspection and evaluation. Upon the completion of the construction of the Improvements pursuant to the Improvement Requirements, the Landowner shall notify the City in writing that the construction of the Improvements have been completed in accordance with the Improvement Requirements. Upon receiving such written notification from the Landowner, and upon receipt of written notification from its inspectors that construction of the Improvements has been completed in accordance with the Improvement Requirements, or as otherwise acceptable to the City, the City shall notify the Landowner in writing that the construction of the Improvements has been satisfactorily completed. Upon receiving such notification, the Landowner shall forthwith file with the County Recorder of the County of Orange a Notice of Completion pursuant to the provisions of Section 3093 of the Civil Code of the State of California. The Landowner shall furnish to the City a duplicate copy of such Notice of Completion showing thereon the date of filing with the County Recorder. The normal and customary costs incurred by the City in inspecting and approving the construction of the Improvements, including administrative fees, plan checking fees, inspection fees, and approval fees shall be advanced by the Landowner as provided in Section 5 herein, such costs to be reimbursed from the proceeds of bonds, if any, issued by the District. Section 4. Liens. Upon the expiration of the applicable time for the recording of claims of liens on construction, as prescribed by Sections 3115 and 3116 of the Civil Code of the State of California, the Landowner shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment in connection with the Improvements have been paid, and that no claims or liens have been recorded by or on behalf of any such person, firm or corporation. Section 5. Payment of Citv's Expenses. The Landowner agrees to pay to the City, in a timely manner, and pursuant to a separate Deposit and Reimbursement Agreement dated September 10, 2001, the normal and customary fees and costs for City review of the construction of the Improvements (including administration fees, plan checking fees, inspection fees, and approval fees), the City' s reasonable costs to evaluate and certify the construction costs of the Improvements (including the City's costs of evaluating any request for payment submitted pursuant to Section 9 of this Agreement or the City's costs incurred pursuant to Section 19 of this Agreement) and those Incidental Expenses which are not contingent upon the issuance of bonds. Such fees and Acquisition Agreement.Heron Pointe 3 1 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 costs may include expenses associated with the review and approval of the Plans and Specifications, fees and expenses of the Construction Manager, if any, as well as costs incurred by the City in the inspection of the construction of the Improvements. The City will reimburse the Landowner for such payments, to the extent of available bond proceeds, pursuant to the terms of the Deposit and Reimbursement Agreement. Section 6. Acquisition of Improvements: Acquisition Price. Provided the Landowner has complied with the requirements of this Agreement, the City agrees to acquire the Improvements from the Landowner upon completion of all the Improvements and approval by City, but only to the extent that bonds are issued by the District and proceeds are available for acquisition of the Improvements under the indenture, fiscal agent agreement, or other agreement pursuant to which the bonds are issued. The price to be paid by the City for the acquisition of the Improvements shall be limited to the lesser of (i) the actual costs incurred by the Landowner to design, engineer and construct the Improvements (assuming the City Engineer upon review of the bid documentation has identified no - unusual limitations on construction and notified the Landowner in writing as to such limitations), including project management expenses provided for in Section 7 of this Agreement, (ii) the projected costs indicated in Exhibit "A" to this Agreement, or (iii) the amount of available bond proceeds after the payment of the Incidental Expenses and the reimbursement of advances pursuant to Section 5 of this Agreement. Expenses that will not be included in the acquisition cost are (i) interest during construction, (ii) any costs related to private improvements, and (iii) in -house tune, expenses, overhead or profit of the Landowner, except as provided in Section 7 of this Agreement. The acquisition price to be paid to the Landowner will be paid promptly by the City following the later of (i) completion of the Improvements and acceptance thereof by the City pursuant to Section 1 of this Agreement, (ii) sale of bonds of the District and the availability of bond proceeds under the indenture, fiscal agent agreement, or other agreement pursuant to which the bonds are issued, or (iii) approval by the City, not to be unreasonably delayed, of a request for payment including such documentation as may be reasonably required by the City pursuant to Section 9 of this Agreement. As a condition to the payment of such acquisition price, the Landowner shall transfer to the City title to the Improvements, in the manner determined by the City, free and clear of all liens and encumbrances of any nature. As an additional condition to the payment of such acquisition price, the Landowner shall transfer, and by this Agreement is deemed to have transferred, to the City, all warranties of its contractors and subcontractors related to the Improvements. Section 7. Project Management Expenses. The "actual costs" incurred by the Landowner to design, engineer,' and construct the Improvements may include project management expenses ( "Project Management Expenses ") in an amount not to exceed the amount indicated in Exhibit "A" to this Agreement (such amount being equal to 10% of projected project costs). Project Management Expenses may include only expenses of the types set forth in Exhibit "A" to this Agreement and must be substantiated pursuant to Section 9 of this Agreement in order to qualify as an actual cost. Acquisition Agreement.Heron Pointe 4 1 Funding and Acquisition .4greement City of Sea! Beach Community Facilities District No 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 Section 8. Development Fees. To the extent that bond are issued by the District and bond proceeds remain following the payment of Incidental Expenses, the reimbursement required pursuant to Section 5 of this Agreement, and the acquisition of the Improvements for the acquisition price set forth in Section 6 of this Agreement, the Landowner will be reimbursed for the Development Fees. The amount of this reimbursement shall be limited to the lesser of (i) the amount of Development Fees, identified in Exhibit "A" and actually paid by the Landowner or (ii) the amount of available bond proceeds. Such reimbursement will be made by the City to the Landowner promptly after the City has made the payments required pursuant to Sections 5 and 6 of this Agreement. Under no circumstances shall the City be required to make reimbursement of the Development Fees until after it has acquired the Improvements pursuant to Section 6 of this Agreement. Section 9. Request for Payment. No payment will be made by the City to the Landowner pursuant to Sections 6, 7 or 8 of this Agreement except upon receipt by the City of a request for payment from the Landowner. Such request for payment shall be in a form acceptable to the City and shall include any such supporting documentation to substantiate such request as the City may reasonably require. For any- request for payment, the following shall apply: 1. Substantiation of Costs. The Landowner shall provide any documentation reasonably requested by the City Engineer substantiating the actual costs of the Improvements. There shall be a presumption of reasonableness as to costs incurred under a construction contract (or change order) entered into as a result of a call for bids (or similar procedure approved by the City Engineer) by the Landowner, provided that no extraordinary limitations or requirements (such as a short time frame) are imposed by the Landowner on the performance of such contracts. For any facility to be acquired by a public entity or utility other than the City, the Developer shall provide written evidence of the approval of such cost substantiation from such entity or utility when requesting payment. 2. Payment of Claims. The Landowner shall provide, in a form satisfactory to the City Engineer, evidence that all of the costs of the Improvement for which payment is sought have been fully paid, including all lien claims. Section 10. Costs of Issuance. The indenture, fiscal agent agreement or similar agreement governing the issuance of bonds may provide for a reasonable amount of bond proceeds to be set aside in a "cost of issuance" account or similar fund or account for the payment of the Incidental Expenses. Such proceeds shall be excluded from the proceeds available for payment pursuant to Sections 6 or 8 of this Agreement until transferred into an improvement account or similar account or fund. Section 11. Cost Overruns. Landowner acknowledges that it is obligated to complete the Improvements regardless of the actual cost of completing the Improvements. Landowner shall be responsible for all cost overruns associated with the design, engineering, and construction of the Improvements. Acquisition Agreement.Heron Pointe 5 1 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 Section 12. Source of Funds. Notwithstanding any provisions of this Agreement, the sole source of funds for the acquisition by the City of the Improvements or for any other amounts payable by the City under this Agreement shall be the proceeds of the sale of bonds for the District available for such purpose under the indenture, fiscal agent agreement, or other agreement pursuant to which bonds are issued. If, for any reason, bonds are not sold for the District or bond proceeds are not available, the City shall not be required to acquire the Improvements from the Landowner, to reimburse any advance for the City' s expenses which has been paid to the City for services provided, to pay any Project Management Expenses, or to reimburse any Development Fees. Section 13. Execution of Additional Documents The Landowner agrees to execute such documents and instruments as may be necessary to carry out the intent of this Agreement. Section 14. Acknowledgement of Disclosure Requirements. The Landowner hereby acknowledges the requirements of Rule 15c2 -12 (the "Rule "), promulgated under the Securities Exchange Act of 1934, and other federal and State security laws, in the preparation of an offering statement for the Bonds and - covenants to provide all materials and information that are determined to be material for purposes of disclosure by the bond counsel, the underwriter, the disclosure counsel, or the City in preparation of said offering statement. The Landowner covenants that it will execute and comply with a "Continuing Disclosure Certificate" in connection with the issuance of bonds by the District. The Landowner acknowledges that it will be required to comply with the requirements of the laws of the State of California relating to mandatory disclosures to prospective property purchasers, including, but not limited to, the requirements of Section 53341.5 of the California Government Code. Section 15. Title Insurance. As a condition precedent to the disbursement of bond proceeds, the City shall receive from a title company acceptable to the City a standard CTLA policy of title insurance with respect to the Property and any property outside of the District on which any of the Improvements are located, in the face amount equal to the principal amount of the bond issue, subject to such title exceptions and bearing such endorsements as required by the City in the City's sole and absolute discretion. The title policy shall establish that the subject property is free and clear of any form of mechanics lien or claim respecting the Improvements, which are being acquired by the City with the bond proceeds, it being expressly understood that the City requires this assurance that the subject special tax lien shall apply to the subject property without any threat of being later deemed by a court of competent jurisdiction to be subordinate to a mechanics lien claim stemming from the work associated with the construction of the Improvements. The title policy shall name the City and the District as insured and all costs and expenses of obtaining the title policy shall be bome by the Landowner. Section 16. Relationship to Subdivision Maps. Other Agreements. Land Use Regulations. and Other Obligations of the Landowner. This Agreement does not rescind, replace, or otherwise effect any obligation that the Landowner may have under any map recorded pursuant Acquisition Agreement.Heron Pointe 6 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 to the Subdivision Map Act (Section 66410 and following of the Government Code of the State of California) to complete the design and construction of any improvement, nor does it alter any obligation the Landowner may have under any such map to dedicate or otherwise transfer any real property or improvements to the City. Likewise, nothing contained in this Agreement shall be construed as affecting the Landowner's duty to perform its obligations under other agreements or land use regulations. All such obligations continue in full force and effect regardless of whether bonds are issued by the District. Section 17. Ritht of Way. The Landowner shall dedicate, convey or transfer, in the manner provided for in Section 6 of this Agreement, to the City at the time the City acquires the Improvements, all rights -of -way then owned by the Landowner in which the Improvements are located. The Landowner shall also at such time grant to the City, by an appropriate instrument prescribed by the City, all easements on private property then owned by the Landowner which may be necessary for the proper operation and maintenance of the Improvements. Section 18. Maintenance of Improvements. Prior to the transfer of ownership of the Improvements by the Landowner to the City, as provided in Section 6 of this Agreement, the Landowner shall be responsible for the maintenance of the Improvements and shall maintain and transfer same to the City in as good condition as they were at the time the Landowner notified the City that construction of same had been completed in accordance with the Plans and Specifications. Upon the transfer of ownership of the Improvements from the Landowner to the City, the City shall be responsible for the maintenance of the Improvements. Section 19. Inspection of Records. The City shall have the right to review all books and records of the Landowner pertaining to costs and expenses incurred by the Landowner pursuant to this Agreement and pertaining to costs and expenses for which the Landowner seeks reimbursement pursuant to this Agreement. The City shall have the right to request and review final cost records, and any reimbursement for costs incurred by the Landowner hereunder shall not exceed the estimates approved by the Construction Manager (or the City Engineer in case there is no Construction Manager) without his or her prior review and written approval. Section 20. Ownership of Improvements. Notwithstanding the fact that some or all of the Improvements may be constructed or be located in dedicated street rights -of -way or on property which has been or will be dedicated to the City, the Improvements shall be and remain the property of the Landowner until they are acquired by the City as provided in the preceding sections of this Agreement. Such ownership by the Landowner shall likewise not be affected by any agreement which the Landowner may have entered into or may enter into with the City pursuant to the provisions of the Subdivision Map Act, Section 66410 et se . of the Government Code of the State of California, which may contain or include provisions with respect to the construction and ownership of public improvements which may seem to be contradictory to the provisions of this Agreement. In all such instances, provisions of this Agreement shall control. Section 21. Relationship to Public Works. This Agreement is for the Acquisition of Improvements or portions thereof by the City from the Landowner and is not intended to be a Acquisition Agreement Heron Pointe 7 1 Funding and Acquisition Agreement City of Seal Beach Communzty Facilities District No. 2.002 -01 Heron Pointe — WL Homes, LLC September, 2002 public works contract. The City and the Landowner agree that the Improvements are of local, and not state -wide concern, and that the provisions of the California Public Contracts,Code shall not apply to the construction of the Improvements. The City and the Developer agree that this Agreement is necessary to assure the timely and satisfactory completion of the Improvements and that compliance with the Public Contracts Code with respect to the Improvements would work an incongruity and would not produce an advantage to the City or the District. Section 22. Improvement Security. Notwithstanding the provisions of this Agreement, the Landowner, at the request of the City, shall be required to secure the construction and completion of construction of the Improvements by providing faithful performance and labor and materials bonds in form and amounts acceptable to the City as required by Sections 66499 through 66499.10 of the Government Code of the State of California. Section 23. Independent Contractor. It is mutually understood that, in performing its obligations under this Agreement, the Landowner is an independent contractor and not the agent of the City. The City shall have no responsibility for payment to any contractor, subcontractor or supplier of the Landowner. - Section 24. Indemnification; Insurance. The Landowner shall assume the defense of, indemnify and save harmless, the City, its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, resulting from, or arising out of this Agreement and the construction of the Improvements. No provision of this Agreement shall in any way limit the extent of the Landowner's responsibility for payment of damages resulting from the operations of the Landowner and its contractors. At the request of the City, the Landowner shall furnish to the City a certificate or certificates of insurance substantiating that it has obtained for the entire period of the construction of the Improvements after the date of this Agreement, a policy of comprehensive general liability insurance with coverage broad enough to include the Landowner's contractual obligations under this Section and having a combined single limit of liability in an amount of at least $1 Million. Said certificate of insurance shall include an endorsement naming the City, its officers, employees and agents as additional insureds. Section 25. Attorneys' Fees. If any party brings an action to enforce the terms of this Agreement or declare its rights hereunder, the prevailing party in any such action shall be entitled to its reasonable attorneys' fees to be paid by the losing party as fixed by the court. Section 26. Termination. This Agreement shall terminate and be of no further - force or effect if the Landowner does not proceed or elect to proceed with the construction of the Improvements within one year of the date of this Agreement, or if the Landowner so proceeds but does not complete the construction of the Improvements within two years of the date of this Agreement. In the event the Landowner notifies the City that it has been unable to complete construction of the Improvements within two years of the date of this Agreement due to delays caused by acts of God, inclement weather, strikes, unavailability of materials, civil insurrection, acts of terrorism, or other matters beyond the control of the Landowner, this Agreement shall continue Acquisition Agreement.Heron Pointe 8 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 in force and effect for not more than one year beyond the stated termination date. The Landowner's financial inability to perform under this Agreement shall not be a valid basis for such an extension. Section 27. Legal Challenge. The City may, in its sole discretion, suspend this Agreement if any legal challenge is filed relating to the validity or enforceability of this Agreement or the District proceedings; provided, that the Agreement shall remain in force if and during any period in which the Landowner coininits by written notification to defend the District and City for any costs or obligations incurred during pendency of such challenge. Section 28. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by the Developer without the prior written consent of the City, which consent shall not be unreasonably withheld or delayed. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. Section 29. Amendment. This Agreement may only be amended by an instrument in writing executed and delivered by the City and the Landowner. Section 30. Waiver. No waiver of, or consent with respect to, any provision of this Agreement by a party hereto shall in any event be effective unless the same shall be in writing and signed by such party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. Section 31. Notices. Any notice to be provided pursuant to this Agreement shall be delivered to the following addresses: Landowner: WL Homes, LLC 895 Dove Street, Suite 110 Newport Beach, CA 92660 Attention: Joanie Madrid Project Manager, Heron Pointe City: City of Seal Beach 211 Eighth Street Seal Beach, California 90740 Attention: City Manager • Copy to: Richards, Watson & Gershon Attorneys at Law 355 S. Grand Avenue, 40 Floor Los Angeles, CA 90071 Attention: Quinn Barrow Acquisition Agreement Heron Pointe 9 Funding and Acquisition Agreement City of Seal Beach Connrnuntty Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. Section 32. No Third Party Beneficiaries. No person or entity shall be deemed to be a third party beneficiary of this Agreement, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, the District and the Landowner, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 33. California Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Califomia. Section 34. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters herein provided for, and may only be amended by a subsequent written agreement executed by all parties. Section 35. Counterparts. , This Agreement may be executed in counterparts, each of which shall be deemed an original, but which together shall constitute a single agreement. Section 36. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Agreement. Acquisition Agreement Heron Pointe 10 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No. 2002 -01 . Heron Pointe — WL Homes, LLC September, 2002 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. CITY OF SEAL BEACH, a California Municipal Corporation By: Mayor ATTEST: City Clerk W.L. HOMES, LLC, a Delaware Limited Liability Company By: Its: • Acquisition Agreement.Heron Pointe 11 Funding and Acquisttzon Agreement City of Seal Beach Community- Facilities District No. 2002 -01 Heron Pointe — WL Homes, LLC September, 2002 EXHIBIT "A" DESCRIPTION OF FACILITIES The cost of the facilities shall include incidental expenses, including the costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, costs incurred in order to carry out the authorized purposes of the District, any other expenses, incidental to the construction, completion and inspection of the authorized work and the attributable costs of engineering and inspection. The facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City and the officials thereof. Facilities Public improvements with a useful life -of not less than five years including (i) street, sidewalk, street light, traffic signal, drainage, signage median and appurtenant improvements to Seal Beach Boulevard, Adolpho Lopez Drive, and Heron Pointe, including, but not limited to, relocation of existing overhead utilities lines and construction of joint trench in furtherance of public safety, (ii) water and sanitary improvements serving real property within the District, including, but not limited to, a sewer lift station, (iii) dry utility improvements and buried vaults serving the District, (iv) improvements to Gum Grove Park, including, but not limited to, landscaping and access improvements, (v) landscape improvements along Seal Beach Boulevard, (vi) sewer, water, park, storm drain, and transportation improvements to be funded through development fees charged by the City of Seal Beach in connection with the development of real property within the District. Acquisition Agreement.Heron Pointe 12 Funding and Acquisition Agreement City of Seal Beach Community Facilities District No 2002 -01 Heron Pointe — WL Homes, LLC September; 2002 EXHIBIT `B" • Acquisition Agreement.Heron Pointe 13 • o, S io a Qy o h . co l V Q.) Q O E o V N oN �"� O N 1 4< O V m o 3 C V O O O ; �N co � ° NC�?, tu o y O ` j .0 % 2 .0 C . D.-1 k. o ill . E F o O c ° C o ° Iv jo 0 O v 3 0 y O o p j Z .C. 44. �. ° ° o C:3 m m F a ° � W to tn o Ai S.. ler Cf) E-. co U m o L o L] a o h `� o • Q ` ``i e o '•-• �, 2 0 ° c o o v H1 ON I...1 -4. It O ` .h v o t� , � .� a h` °` 1—q z I C 2 o V c t m c°"° o '1'' c.) �, ° ° v o o ° i CV ° • e 0 0 �� _ o O ¢� o ° .y ° m --,° i3 �� o to S. V .� O � > Ci ��Oh o ck 0 0 O N g q r ti b-s 1. ' . U y o 0 a co ( I N ° �O y -. O Q 0 U V O ` V p '�Ti jc=W�O� O� �O v o` z., CO C5 �� h� �Cn 'J0 p C V �Q� � O � ' o Q� F ° . _Cc ��C') hyc • OQ o c tu o �� W J W O q QQt r� 4 O VO �N .s �� ° 0 o, V p C�O W - . w � ¢ O " V ~h �Z is� cu o � �O m 0� 0 Qom` , �, C� °ilfl O L, h�oWZZ�o O �C� I cc 2 O C 'Z [si OCC 0 �, ZOO IL,IL-1-,iZt 22 p� O V 00,00 °2o�m�� in i City of Seal Beach Memo To: Mayor Larson & Members of the City Council From: Mac Cummins CC: John Bahorski Date: September 23, 2002 Re: Heron Pointe Acquisition Agreement Attachment "A" Mayor Larson & Members of the City Council, The following is a revised attachment "A" to the acquisition agreement which is referenced in your agenda packet this evening and further clarifies the description of the project. This attachment "A" should replace the one attached to the acquisition agreement the Council received with a Memo from Lee Whittenberg. Mac Cummins Associate Planner /Special Projects Manager f • CITY OF SEAL BEACH COMMUNITY FACILITIES DISTRICT NO. 2002 -01 (HERON POINTE) FUNDING AND ACQUISITION AGREEMENT THIS AGREEMENT is made and entered into as of the day of 2002, by and between the CITY OF SEAL BEACH, a municipal corporation organized and existing under the constitution and laws of the State of California (hereinafter referred to as the "City") and WL HOMES, LLC, a Delaware Limited Liability Company (hereinafter referred to as the "Landowner "). RECITALS A. By its Resolution No. 5049 and its Resolution No. 5050 (the "Resolutions of Intention "), the City Council of the City of Seal Beach has initiated proceedings for the establishment of a community facilities district pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Division 2 of Title 5 (commencing with Section 53311) of the Government Code of the State of California (the "Act "). The Resolutions of Intention state (i) the City =s intent to form Community Facilities District No. 2002 -01 (Heron Pointe) (the "District "), (ii) the City =s intent to levy a special tax (the "Special Tax ") against properties located within the District to fund the acquisition of certain improvements (the "Improvements "), to reimburse the Landowner for money advanced by the Landowner to pay certain development fees charged by the City and used by the City to finance improvements (the "Development Fees "), and to fund certain costs incidental to the issuance of bonds and the formation of the District (the "Incidental Expenses "); (iii) the City =s intent to incur bonded indebtedness for the purpose of financing the Improvements, the Development Fees, and the Incidental Expenses; and (iv) the City =s intent to take certain related actions. The Improvements, the Development Fees and the Incidental Expenses are more completely described in Exhibit "A" attached hereto and incorporated herein by reference. B. The Landowner is the owner of all of the land located in the District (such area of land hereinafter referred to as the "Property" is shown on Exhibit `B" attached hereto and incorporated herein by reference). C. The City is authorized by Section 53313.5 of the Act to acquire and finance the acquisition of authorized public facilities pursuant to the requirements of the Act. D. The purpose of this Agreement is (i) to provide for coordination between -1- the City and the Landowner with regard to the design of the Improvements (as described in Exhibit "A" hereto), the construction of the Improvements, and the acquisition of the Improvements by the City from the Landowner when all of the construction thereof has been completed by the Landowner to the satisfaction of the City and when bond proceeds become available to the City, (ii) to provide for the reimbursement of the Development Fees, following the completion and acquisition of the Improvements, to the extent remaining bond proceeds are available for this purpose, and (iii) to provide for certain other matters related to the design, construction and acquisition of the Improvements. E. The Landowner has expertise in the construction of public facilities of the character of the Improvements, and the City has determined that it will obtain no advantage from undertaking the construction of the Improvements and that the Improvements may be constructed by the Landowner as if they had been constructed under the direction and supervision or under the authority of the City. COVENANTS NOW, THEREFORE, in consideration of the preceding recitals and the mutual promises and covenants hereinafter contained, the parties agree as follows: Section 1. Construction. The Landowner has commenced or will commence and will complete the construction of the Improvements at its sole cost. The City has no financial obligation to construct the Improvements and all expenses for the Improvements, including associated incidental expenses, shall be the obligation of the Landowner. The City shall have the right to review and approve detailed plans and specifications, including as -built plans, (hereinafter the "Plans and Specifications ") prepared at the expense of the Landowner, for construction of the Improvements. As required by Section 53313.5 of the Act, all Improvements to be acquired from the Landowner must be constructed as if they has been constructed under the direction and supervision, or under the authority of, the City, including, but not limited to (i) requirements that all Improvements be constructed by contractors and/or subcontractors paying prevailing wages, as determined by the Director of the Department of Industrial Relations pursuant to Section 1770, et semc . of the Labor Code of the State of California and (ii) competitive bidding requirements pursuant to Section 1720 of the Labor Code. All Improvements to be acquired from the Landowner must (i) be completed in accordance with the Plans and Specifications as such Plans and Specifications have been approved by all appropriate City departments, (ii) satisfy all requirements customarily imposed upon subdividers or owners by the City in such circumstances, (iii) be completed prior to the -2- termination of this Agreement under Section 26 of this Agreement, and (iv) be constructed in compliance with all applicable federal, state, and local laws, rules, and regulations (collectively, the "Improvement Requirements "). The Landowner shall be responsible for entering into all contracts required for the construction of the Improvements, including any change orders necessary to complete construction. The Landowner shall comply with all policies of the City regarding bidding of the contracts. All such contracts and any changes to the Plans and Specifications shall be submitted to the City Engineer for review and approval as to cost and quantity and quality of work. Section 2. Construction Management. At the option of the City, the City may retain the services of a firm of civil engineers specializing in the management of public infrastructure projects (the "Construction Manager "), which shall consult with the Landowner and the City in coordinating and supervising the scheduling of the construction of the Improvements. Alternatively, the City Engineer or his or her designee may provide these consultation, coordination, and supervision services. Section 3. Inspection of Improvements. The City shall inspect and evaluate the Improvements to insure that they have been constructed in accordance with the Plans and Specifications. The City =s personnel shall have access to the site of the Improvements at all reasonable times for the purpose of accomplishing such inspection and evaluation. Upon the completion of the construction of the Improvements pursuant to the Improvement Requirements, the Landowner shall notify the City in writing that the construction of the Improvements have been completed in accordance with the Improvement Requirements. Upon receiving such written notification from the Landowner, and upon receipt of written notification from its inspectors that construction of the Improvements has been completed in accordance with the Improvement Requirements, or as otherwise acceptable to the City, the City shall notify the Landowner in writing that the construction of the Improvements has been satisfactorily completed. Upon receiving such notification, the Landowner shall forthwith file with the County Recorder of the County of Orange a Notice of Completion pursuant to the provisions of Section 3093 of the Civil Code of the State of California. The Landowner shall furnish to the City a duplicate copy of such Notice of Completion showing thereon the date of filing with the County Recorder. The normal and customary costs incurred by the City in inspecting and approving the construction of the Improvements, including administrative fees, plan checking fees, inspection fees, and approval fees shall be advanced by the Landowner as provided in Section 5 herein, such costs to be reimbursed from the proceeds of bonds, if any, issued by the District. Section 4. Liens. Upon the expiration of the applicable time for the recording -3- of claims of liens on construction, as prescribed by Sections 3115 and 3116 of the Civil Code of the State of California, the Landowner shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment in connection with the Improvements have been paid, and that no claims or liens have been recorded by or on behalf of any such person, firm or corporation. Section 5. Payment of City =s Expenses. The Landowner agrees to pay to the City, in a timely manner, and pursuant to a separate Deposit and Reimbursement Agreement dated September 10, 2001, the normal and customary fees and costs for City review of the construction of the Improvements (including administration fees, plan checking fees, inspection fees, and approval fees), the City' s reasonable costs to evaluate and certify the construction costs of the Improvements (including the City's costs of evaluating any request for payment submitted pursuant to Section 9 of this Agreement or the City's costs incurred pursuant to Section 19 of this Agreement) and those Incidental Expenses which are not contingent upon the issuance of bonds. Such fees and costs may include expenses associated with the review and approval of the Plans and Specifications, fees and expenses of the Construction Manager, if any, as well as costs incurred by the City in the inspection of the construction of the Improvements. The City will reimburse the Landowner for such payments, to the extent of available bond proceeds, pursuant to the terms of the Deposit and Reimbursement Agreement. Section 6. Acquisition of Improvements; Acquisition Price. Provided the Landowner has complied with the requirements of this Agreement, the City agrees to acquire the Improvements from the Landowner upon completion of all the Improvements and approval by City, but only to the extent that bonds are issued by the District and proceeds are available for acquisition of the Improvements under the indenture, fiscal agent agreement, or other agreement pursuant to which the bonds are issued. The price to be paid by the City for the acquisition of the Improvements shall be limited to the lesser of (i) the actual costs incurred by the Landowner to design, engineer and construct the Improvements (assuming the City Engineer upon review of the bid documentation has identified no unusual limitations on construction and notified the Landowner in writing as to such limitations), including project management expenses provided for in Section 7 of this Agreement, (ii) the projected costs indicated in Exhibit AA@ to this Agreement, or (iii) the amount of available bond proceeds after the payment of the Incidental Expenses and the reimbursement of advances pursuant to Section 5 of this Agreement. Expenses that will not be included in the acquisition cost are (i) interest during construction, (ii) any costs related to private improvements, and (iii) in -house time, expenses, overhead or profit of the Landowner, except as provided in Section 7 of this Agreement. The acquisition price to be paid to the Landowner will be paid promptly by the City following the later of (i) completion of the Improvements and acceptance thereof by the City pursuant to Section 1 of this Agreement, (ii) sale of bonds of the District and the availability -4- of bond proceeds under the indenture, fiscal agent agreement, or other agreement pursuant to which the bonds are issued, or (iii) approval by the City, not to be unreasonably delayed, of a request for payment including such documentation as may be reasonably required by the City pursuant to Section 9 of this Agreement. As a condition to the payment of such acquisition price, the Landowner shall transfer to the City title to the Improvements, in the manner determined by the City, free and clear of all liens and encumbrances of any nature. As an additional condition to the payment of such acquisition price, the Landowner shall transfer, and by this Agreement is deemed to have transferred, to the City, all warranties of its contractors and subcontractors related to the Improvements. • Section 7. Project Management Expenses. The "actual costs" incurred by the Landowner to design, engineer, and construct the Improvements may include project management expenses ( "Project Management Expenses ") in an amount not to exceed the amount indicated in Exhibit "A" to this Agreement (such amount being equal to 10% of projected project costs). Project Management Expenses may include only expenses of the types set forth in Exhibit "A" to this Agreement and must be substantiated pursuant to Section 9 of this Agreement in order to qualify as an actual cost. Section 8. Development Fees. To the extent that bond are issued by the District and bond proceeds remain following the payment of Incidental Expenses, the reimbursement required pursuant to Section 5 of this Agreement, and the acquisition of the Improvements for the acquisition price set forth in Section 6 of this Agreement, the Landowner will be reimbursed for the Development Fees. The amount of this reimbursement shall be limited to the lesser of (i) the amount of Development Fees, identified in Exhibit "A" and actually paid by the Landowner or (ii) the amount of available bond proceeds. Such reimbursement will be made by the City to the Landowner promptly after the City has made the payments required pursuant to Sections 5 and 6 of this Agreement. Under no circumstances shall the City be required to make reimbursement of the Development Fees until after it has acquired the Improvements pursuant to Section 6 of this Agreement. Section 9. Request for Payment. No payment will be made by the City to the Landowner pursuant to Sections 6, 7 or 8 of this Agreement except upon receipt by the City of a • request for payment from the Landowner. Such request for payment shall be in a form acceptable to the City and shall include any such supporting documentation to substantiate such request as the City may reasonably require. For any request for payment, the following shall apply: 1. Substantiation of Costs. The Landowner shall provide any documentation reasonably requested by the City Engineer substantiating the actual costs of the Improvements. There shall be a presumption of reasonableness as to costs -5- incurred under a construction contract (or change order) entered into as a result of a call for bids (or similar procedure approved by the City Engineer) by the Landowner, provided that no extraordinary limitations or requirements (such as a short time frame) are imposed by the Landowner on the performance of such contracts. For any facility to be acquired by a public entity or utility other than the City, the Developer shall provide written evidence of the approval of such cost substantiation from such entity or utility when requesting payment. 2. Payment of Claims. The Landowner shall provide, in a form satisfactory to the City Engineer, evidence that all of the costs of the Improvement for which payment is sought have been fully paid, including all lien claims. Section 10. Costs of Issuance. The indenture, fiscal agent agreement or similar agreement governing the issuance of bonds may provide for a reasonable amount of bond proceeds to be set aside in a "cost of issuance" account or similar fund or account for the payment of the Incidental Expenses. Such proceeds shall be excluded from the proceeds available for payment pursuant to Sections 6 or 8 of this Agreement until transferred into an improvement account or similar account or fund. Section 11. Cost Overruns. Landowner acknowledges that it is obligated to complete the Improvements regardless of the actual cost of completing the Improvements. Landowner shall be responsible for all cost overruns associated with the design, engineering, and construction of the Improvements. Section 12. Source of Funds. Notwithstanding any provisions of this Agreement, the sole source of funds for the acquisition by the City of the Improvements or for any other amounts payable by the City under this Agreement shall be the proceeds of the sale of bonds for the District available for such purpose under the indenture, fiscal agent agreement, or other agreement pursuant to which bonds are issued. If, for any reason, bonds are not sold for the District or bond proceeds are not available, the City shall not be required to acquire the Improvements from the Landowner, to reimburse any advance for the City' s expenses which has been paid to the City for services provided, to pay any Project Management Expenses, or to reimburse any Development Fees. Section 13. Execution of Additional Documents The Landowner agrees to execute such documents and instruments as may be necessary to carry out the intent of this Agreement. Section 14. Acknowledgement of Disclosure Requirements. The Landowner hereby acknowledges the requirements of Rule 15c2 -12 (the "Rule "), promulgated under the -6- Securities Exchange Act of 1934, and other federal and State security laws, in the preparation of an offering statement for the Bonds and covenants to provide all materials and information that are determined to be material for purposes of disclosure by the bond counsel, the underwriter, the disclosure counsel, or the City in preparation of said offering statement. The Landowner covenants that it will execute and comply with a "Continuing Disclosure Certificate" in connection with the issuance of bonds by the District. The Landowner acknowledges that it will be required to comply with the requirements of the laws of the State of California relating to mandatory disclosures to prospective property purchasers, including, but not limited to, the requirements of Section 53341.5 of the California Government Code. Section 15. Title Insurance. As a condition precedent to the disbursement of bond proceeds, the City shall receive from a title company acceptable to the City a standard CTLA policy of title insurance with respect to the Property and any property outside of the District on which any of the Improvements are located, in the face amount equal to the principal amount of the bond issue, subject to such title exceptions and bearing such endorsements as required by the City in the City =s sole and absolute discretion. The title policy shall establish that the subject property is free and clear of any form of mechanics lien or claim respecting the Improvements, which are being acquired by the City with the bond proceeds, it being expressly understood that the City requires this assurance that the subject special tax lien shall apply to the subject property without any threat of being later deemed by a court of competent jurisdiction to be subordinate to a mechanics= lien claim stemming from the work associated with the construction of the Improvements. The title policy shall name the City and the District as insured and all costs and expenses of obtaining the title policy shall be borne by the Landowner. Section 16. Relationship to Subdivision Maps, Other Agreements, Land Use Regulations, and Other Obligations of the Landowner. This Agreement does not rescind, replace, or otherwise effect any obligation that the Landowner may have under any map recorded pursuant to the Subdivision Map Act (Section 66410 and following of the Government Code of the State of California) to complete the design and construction of any improvement, nor does it alter any obligation the Landowner may have under any such map to dedicate or otherwise transfer any real property or improvements to the City. Likewise, nothing contained in this Agreement shall be construed as affecting the Landowner =s duty to perform its obligations under other agreements or land use regulations. All such obligations continue in full force and effect regardless of whether bonds are issued by the District. Section 17. Right of Way. The Landowner shall dedicate, convey or transfer, in the manner provided for in Section 6 of this Agreement, to the City at the time the City acquires the Improvements, all rights -of -way then owned by the Landowner in which the -7- Improvements are located. The Landowner shall also at such time grant to the City, by an appropriate instrument prescribed by the City, all easements on private property then owned by the Landowner which may be necessary for the proper operation and maintenance of the Improvements. Section 18. Maintenance of Improvements. Prior to the transfer of ownership of the Improvements by the Landowner to the City, as provided in Section 6 of this Agreement, the Landowner shall be responsible for the maintenance of the Improvements and shall maintain and transfer same to the City in as good condition as they were at the time the Landowner notified the City that construction of same had been completed in accordance with the Plans and Specifications. Upon the transfer of ownership of the Improvements from the Landowner to the City, the City shall be responsible for the maintenance of the Improvements. Section 19. Inspection of Records. The City shall have the right to review all books and records of the Landowner pertaining to costs and expenses incurred by the Landowner pursuant to this Agreement and pertaining to costs and expenses for which the Landowner seeks reimbursement pursuant to this Agreement. The City shall have the right to request and review final cost records, and any reimbursement for costs incurred by the Landowner hereunder shall not exceed the estimates approved by the Construction Manager (or the City Engineer in case there is no Construction Manager) without his or her prior review and written approval. Section 20. Ownership of Improvements. Notwithstanding the fact that some or all of the Improvements may be constructed or be located in dedicated street rights -of -way or on property which has been or will be dedicated to the City, the Improvements shall be and remain the property of the Landowner until they are acquired by the City as provided in the preceding sections of this Agreement. Such ownership by the Landowner shall likewise not be affected by any agreement which the Landowner may have entered into or may enter into with the City pursuant to the provisions of the Subdivision Map Act, Section 66410 et seq. of the Government Code of the State of California, which may contain or include provisions with respect to the construction and ownership of public improvements which may seem to be contradictory to the provisions of this Agreement. In all such instances, provisions of this Agreement shall control. Section 21. Relationship to Public Works. This Agreement is for the Acquisition of Improvements or portions thereof by the City from the Landowner and is not intended to be a public works contract. The City and the Landowner agree that the Improvements are of local, and not state -wide concern, and that the provisions of the California Public Contracts Code shall not apply to the construction of the Improvements. The City and the Developer agree that this Agreement is necessary to assure the timely and satisfactory completion of the Improvements and that compliance with the Public Contracts Code with respect to the -8- Improvements would work an incongruity and would not produce an advantage to the City or the District. Section 22. Improvement Security. Notwithstanding the provisions of this Agreement, the Landowner, at the request of the City, shall be required to secure the construction and completion of construction of the Improvements by providing faithful performance and labor and materials bonds in form and amounts acceptable to the City as required by Sections 66499 through 66499.10 of the Government Code of the State of California. Section 23. Independent Contractor. It is mutually understood that, in performing its obligations under this Agreement, the Landowner is an independent contractor and not the agent of the City. The City shall have no responsibility for payment to any contractor, subcontractor or supplier of the Landowner. Section 24. Indemnification; Insurance. The Landowner shall assume the defense of, indemnify and save harmless, the City, its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, resulting from, or arising out of this Agreement and the construction of the Improvements. No provision of this Agreement shall in any way limit the extent of the Landowner =s responsibility for payment of damages resulting from the operations of the Landowner and its contractors. At the request of the City, the Landowner shall furnish to the City a certificate or certificates of insurance substantiating that it has obtained for the entire period of the construction of the Improvements after the date of this Agreement, a policy of comprehensive general liability insurance with coverage broad enough to include the Landowner =s contractual obligations under this Section and having a combined single limit of liability in an amount of at least $1 Million. Said certificate of insurance shall include an endorsement naming the City, its officers, employees and agents as additional insureds. Section 25. Attorneys' Fees. If any party brings an action to enforce the terms of this Agreement or declare its rights hereunder, the prevailing party in any such action shall be entitled to its reasonable attorneys' fees to be paid by the losing party as fixed by the court. Section 26. Termination. This Agreement shall terminate and be of no further force or effect if the Landowner does not proceed or elect to proceed with the construction of the Improvements within one year of the date of this Agreement, or if the Landowner so proceeds but does not complete the construction of the Improvements within two years of the date of this Agreement. In the event the Landowner notifies the City that it has been unable to complete construction of the Improvements within two years of the date of this Agreement due to delays caused by acts of God, inclement weather, strikes, unavailability of materials, civil insurrection, -9- acts of terrorism, or other matters beyond the control of the Landowner, this Agreement shall continue in force and effect for not more than one year beyond the stated termination date. The Landowner =s financial inability to perform under this Agreement shall not be a valid basis for such an extension. Section 27. Legal Challenge. The City may, in its sole discretion, suspend this Agreement if any legal challenge is filed relating to the validity or enforceability of this Agreement or the District proceedings; provided, that the Agreement shall remain in force if and during any period in which the Landowner commits by written notification to defend the District and City for any costs or obligations incurred during pendency of such challenge. Section 28. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by the Developer without the prior written consent of the City, which consent shall not be unreasonably withheld or delayed. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. Section 29. Amendment. This Agreement may only be amended by an instrument in writing executed and delivered by the City and the Landowner. Section 30. Waiver. No waiver of, or consent with respect to, any provision of this Agreement by a party hereto shall in any event be effective unless the same shall be in writing and signed by such party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. Section 31. Notices. Any notice to be provided pursuant to this Agreement shall be delivered to the following addresses: Landowner: WL Homes, LLC 895 Dove Street, Suite 110 Newport Beach, CA 92660 Attention: Joanie Madrid Project Manager, Heron Pointe City: City of Seal Beach 211 Eighth Street Seal Beach, California 90740 Attention: City Manager -10- • Copy to: Richards, Watson & Gershon Attorneys at Law 355 S. Grand Avenue, 40 Floor Los Angeles, CA 90071 Attention: Quinn Barrow Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. Section 32. No Third Party Beneficiaries. No person or entity shall be deemed to be a third party beneficiary of this Agreement, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, the District and the Landowner, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 33. California Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 34. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters herein provided for, and may only be amended by a subsequent written agreement executed by all parties. Section 35. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but which together shall constitute a single agreement. Section 36. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Agreement. -11- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. CITY OF SEAL BEACH, a California Municipal Corporation By: Mayor ATTEST: City Clerk W.L. HOMES, LLC, a Delaware Limited Liability Company By: -12- DESCRIPTION OF FACILITIES The cost of the facilities shall include incidental expenses, including the costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, costs incurred in order to carry out the authorized purposes of the District, any other expenses, incidental to the construction, completion and inspection of the authorized work and the attributable costs of engineering and inspection. The facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City and the officials thereof. Facilities Public improvements with a useful life of not less than five years including (i) street, sidewalk, street light, traffic signal, drainage, signage median and appurtenant improvements to Seal Beach Boulevard, Aldolpho Lopez Drive, and Heron Pointe, including, but not limited to, relocation of existing overhead utilities lines and construction of joint trench in furtherance of public safety, (ii) water and sanitary improvements serving real property within the District, including, but not limited to, a sewer lift station, (iii) dry utility improvements and burd vaults serving the District, (iv) improvements to Gum Grove Park, including, but not limited to, landscaping and access improvements, (v) landcape improvements along Seal Beach Boulevard, (vi) sewer, water, park, storm drain, and transportation improvements to be funded through development fees charged by the City of Seal Beach in connection with the development of real property within the District. -13-